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– Reviewed by Nick Cawley, July 29 2022
Trading style often correlates with the personality of the trader. It is important to reflect internally on personality and lifestyle before choosing a trading strategy and creating a trading plan. This is because using a trading style contrary to your personality will lead to difficulties down the road in sticking to your trading plan.When a trader finds the trading style that suits them best; the style generally endures long term. A trader who isn’t comfortable with a trading style or has not found a home in a specific trading style is the one who most often makes the most common trading mistakes.
Trading Styles for Highly-Organized Individuals Short on Time
Strategies to consider:
- Swing Trading– Swing trades are considered medium-term as positions are generally held anywhere between a few hours to a few days. The time investment is minimal which is suitable for traders short on time. Orders to open and close may be used which will automatically trigger once certain price levels are reached.
- Automated Trading – Another approach for traders short on time, or trading in their spare time, is automated trading. Traders merely set their entry and exit criteria along with the size of the trade and allow the market to do the rest.
Trading Style for Cautious Individuals with Time to Research
Strategies to consider:
- Position Trading– This is suitable for traders looking to hold positions for a prolonged period (months/years), often basing decisions on long-term fundamental factors. Large capital is required to withstand any potential volatility during the lifetime of the trade in order to avoid a margin call. Cautious individuals will also tend to trade smaller sizes, make use of stops, and avoid highly volatile markets.
Trading Style for Decisive Individuals who Prefer Instant Results
Strategies to consider:
- Scalp Trading – A scalp trader looks to open and close a trade within minutes, often takingadvantage of small price movements usually with high leverage. Profits and losses are realized swiftly due to the fast-moving nature of this trading strategy. Decisive traders that seek instant results often trade the news by formulating an opinion of how the market is likely to react and plan accordingly.
Being Consistent with Your Trading Style
Consistency in trading style will lead to consistency in results. Altering styles when trades are not favourable is a common mistake with novice traders. Judgement should not be handed after limited trades, because not every trade is successful. If the trading strategy is sound with proper risk management, sticking to it should provide the desired results.
Finding Your Trading Personality and Style: A Summary
Traders of different personalities and lifestyles can all participate in the forex market. Whether a trader is comfortable with a hands-on longer-term swing or position trading approach, or shorter-term day trading or scalping approach or even a hands-off automated trading approach; trading has something for everyone!
Discover what kind of trader you are with the DailyFX DNA FX quiz!
Become a Better Trader with Our Trading Tips
- Knowing how to control emotions while trading can prove to be the difference between success and failure. explore the importance of emotions in trading.
- It is important to have trading goals to work towards. Learn more about how to set these goals in our Becoming a Better Trader webinar series.
- Our research team analyzed over 30 million live trades to uncover the Traits of Successful Traders. Incorporate these traits into your strategy to give yourself an edge in the markets.
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Image and article originally from www.dailyfx.com. Read the original article here.