What are the different trading styles?
There are 4 primary trading strategies: day trading, position trading, swing trading, and scalping. The period the trade stays open for influences the trading style.
1. Day trading
Day traders open and close their trade positions in one day. It eliminates the risk of significant overnight fluctuations.
They exit their position at day’s end with profits or losses. Day traders hold trades for minutes or, at most, hours. They need ample time to assess market conditions and track positions throughout the daytime.
2. Position Trading
Position trading is a long-term trading style. It’s suitable for calm traders who aren’t looking for quick returns.
Position traders focus on lasting price fluctuations. They aim towards high profits from notable shifts in currency prices. Position trades last for weeks, months, and even years.
3. Swing trading
Swing traders keep their positions for days, sometimes even for weeks. They hold their positions while capturing short-range market movements. They need to watch trades and charts during the day.
Scalpers hold positions for short periods. Scalping involves manipulating price gaps triggered by order flows and bid-ask spreads.