When you first start trading, you only know how to buy low and sell high. But there’s much more to it than that. Many factors influence your success, including how long you hold your trades.
I’ve tried all types of trading and discovered that not all types of trading suit everyone, and you should choose your trading style based on your personality rather than how profitable it is.
Scalping
Scalping is when you buy and sell within a few seconds to minutes.
Personality
This type of trading is best suited to people who can make quick decisions.
What do I like about it?
The main advantage of this trading style is that you do not have to predict larger movements. Stocks move 0.1$ more easily than they make $5. It is less difficult to predict.
I liked this trading style mainly because it is easier to predict and I had more winning trades than losing trades.
You don’t have to be particularly over-smart. You only need a simple strategy and the discipline to put it into action.
What I don’t like about it?
The main disadvantage is that the risk-reward ratio is not optimal. 1:1 is the most preferred risk reward ratio.
I don’t want to make quick decisions on a regular basis because it consumes most of my time and energy and keeps me on the edge of my seat. It also has an emotional impact on me on a daily basis.
When I scalped the market, I made more profits. But when I lost, I gave back most of my profits, which I believe is not worth my time and mental energy.
Day trading
Day trading or intraday trading is when you buy and sell on the same day. You do not keep the positions for the following day.
Most brokerages also offer auto-square off, which means your positions will be closed automatically when the market closes for the day.
Personality
This is suitable for those with the greatest emotional control and those who want to generate good profits from day-to-day fluctuations by working just a few hours a day.
What I like about it?
The main advantage of day trading is that you avoid the overnight risk. There will be so many events in your country or around the world that will have an impact on the market.
What I don’t like about it?
You will need to spend some time each day to analysing the charts. You must keep an eye out for any minor changes to the strategy, though the majority of it can be automated.
Swing trading
Swing trading is when you hold your trades for more than a day.
I just love this trading style, and it generates more profit for me than the other ones.
Personality
This is better suited to people who are more patient and know how to deal with overnight risks.
Why I love Swing Trading?
I love this type of strategy because it eliminates the need to trade every day but you can still be profitable at the end.
According to me, this is the simplest and most secure strategy ever.
You will never lose your entire capital by swing trading stocks with proper money management.
What are the problems in swing trading?
The main disadvantages are the overnight risks and the ability to hold short positions.
In the forex market, you can short the pairs and hold them for more than a day, depending on the size of your account.
However, shorting stocks for more than a day is not permitted in Indian stock markets. You may need to use futures or options to do so.
Why I will never stop swing trading ?
I just love this concept of swing trading as all you have to do is analyse the stock properly, have a solid trading , buy it and let the profits run.
I typically hold onto stocks for a day to a week and trade primarily on 1-day time frames.
The strategy is a tight consolidation breakout strategy that guarantees me at least 10% returns per month.
I simply need to screen for stocks that are in a range and wait for a breakout. Other than monitoring the stock’s movement after the market opens, not much work is done each day.
I do day trading as well. But my psychology is impacted by a few consecutive losses, though. Even though I might make money the following day, I don’t want to use up all of my emotional reserves every day.
Even though day trading is theoretically more profitable, swing trading made me more money over the long term for one specific reason: Trading Psychology.
Positional trading
Positional trading is when you keep your trades for more than a few weeks, usually a few months.
This is more of a set-and-forget strategy, where you can be comfortable with your trades even if you don’t track them.
Personality
This is appropriate for people who have a surplus of cash and confidence in their trading plan.
What do I like about it?
This strategy appeals to me because it requires just basic knowledge of stock market. Because most stocks tend to rise in value over time. So there is no need to worry much about your positions. Proper money management is enough to be profitable.
What I don’t like about it?
I don’t do this type of trading because it can take months to become profitable. This type of trading is possible in stocks, but it is not very profitable in forex or derivatives.
About Post Author
Resources & Links
Tradingview – Charting Platform
Zerodha – Trading brokerage platform (India)
Disclaimer
Trading involves substantial risk, and past performance is not indicative of future results. Always conduct your own research and consider seeking professional advice before making any investment decisions. The information provided on this platform about digital entrepreneurship is based on the author’s experiences and industry knowledge. It should not be considered as financial, legal, or business advice. Please consult with experts in these fields before making business decisions. This blog may contain affiliate links, and we may earn a commission if you make a purchase through these links. Your support is appreciated.
