In the world of trading, there are various different styles which traders use to create the best opportunities for profit, and the highest chance of success in their trading journeys.
Therefore, it’s vital for your own journey that you understand all the different trading styles available, so you have more strategies in your arsenal to use for your investments.
In light of this, we’ve put together this article to show you the different trading styles you can use, and what benefits each one brings.
This style of trading is arguably the simplest of amongst the other styles. The one factor that makes this style unique, is that any trades you open must be closed by the end of your trading day.
The number of trades you open is down to you. For instance, you might want to invest in or trade Kinnevik share, along with trading other shares in the same day. Just ensure they’re all closed when your trading day ends.
Benefits of this style include:
- Better risk management, since no trades are left vulnerable to downfalls of overnight risk.
- Faster return on investments, since all trades are completed and their returns produced in one day.
Position trading is used to make profits on the markets over a much longer period of time. With position trading, you would only open a few positions at a time, but you’d hold them for lengthy periods – this could be months or even years.
The aim of this strategy is to take advantage of any significant trends on the market which are predicted to last a long while. For example, a steady price increase in a company’s shares could produce substantial profits for a position trader.
The benefits of this style include:
- Potential for large profits – the longer a successful position is held with an asset, the greater the potential return is when it’s closed.
- Less trades to monitor – since you only have a few positions open at one time, you can have more control over how they’re performing.
Scalping trading is essentially the complete opposite trading style of position trading. In this process, you open multiple positions at one time, but you only hold them for very short periods – this could be a matter of minutes or sometimes seconds.
This strategy aims to give traders multiple short-term profits, which although may be incremental on their own, can collectively produce large returns for the investor.
The benefits of this style are:
- More control over risk – since positions are only open for a short amount of time, so any losses can be mitigated quickly.
- Higher chance of profit – since you’re executing higher volumes of trades, one unsuccessful trade can have less impact among several successful ones.
This trading style is used to produce profits amidst any sudden, significant changes in the markets. With swing trading, you open trade positions for when an asset’s price value ‘swings’ up or down.
There are several reasons why an asset might suddenly move drastically in one direction. A swing trader will use technical analysis to predict this, and open a trade just in time to ride the price movement, and close the trade before the direction reverses.
The benefits of this style are:
- Many chances to spot swings – as there are several factors you can monitor which can create price swings, like external events, for instance.
- Substantial profits in short periods – as the price swings can happen quickly but produce significant rises or drops, and therefore bring large profit potential.
There’s a wide range of trading styles to choose from, each with its own processes and benefits, so be sure to take on the right style that’s most appropriate for each of your investments.