What Type of Trader Are You?

It is imperative to pick a trading style that best suits your personality before you start navigating the stock market. Without a technique, you will get confused and may end up with huge losses. Your adopted style must depend on your financial goal, risk tolerance, time that you can invest daily to follow the market, and several other similar factors.

There are four main types of trading styles:

1. The Scalper

2. The Day Trader

3. The Swing Trader

4. The Positional Trader

• Scalpers -

Scalpers hold onto for a few seconds to a few minutes at the most. Their main objective is to grab very small moves as many times as they can throughout the day. Scalpers trade frequently and in small successions. They maintain High risks and reward with high stress. A scalp trader needs to have a strict exit policy because one large loss could eliminate all the small profits he has made in the other deals. Scalp trading, therefore, needs discipline, decisiveness, and stamina. With these qualities and the right tools, you can become a successful scalp trader.

• The Day Trader -

These kinds of traders do not hold their trades overnight. a day trader buys and subsequently sells within the same trading day, which means all the positions that he creates are closed on the same trading day with either a profit or a loss. Due to the short-term nature of day trading, there is less overnight risk involved in it as there’s no risk of something happening overnight to cause a big loss. In day trading they maintain a moderate risk and reward ratio.

• The Swing Trader -

Swing trading involves taking trades that last a couple of days up to several months in order to profit from an anticipated price move. Typically, swing trading involves holding a position either long or short for more than one trading session, but usually not longer than several weeks or a couple of months. Swing traders catch a swing and further move to gain profits. Here swing traders maintain a low-risk high reward ratio with less stress.

• The Positional Trader -

Positional traders are those that have trades that last for several weeks, months, or even years. Of all the types of trading, position trading is the one with the longest holding times. Consequently, the profit potential is greater. Position traders are less concerned with short-term fluctuations, unless they can impact the long-term outlook of their position, and are by definition trend followers. Position traders usually use a combination of technical analysis and fundamental analysis when making decisions, but also take into consideration other factors such as market trends and historical patterns. Positional traders maintain a low-risk high reward ratio with low stress. Good position traders are those who can successfully identify the right entry and exit points.

No matter what style you choose, you have to make sure that it truly fits your personality.