Regardless of the market you choose, trading can be a complex process, requiring skill, understanding of the market, and well-informed strategies.
The success of your trading journey is highly dependant on several factors surrounding the way you approach each trade, and to increase your chances of profit, you need to ensure you’re executing your trades effectively.
The type of trader you areis one of the most important things you need to be aware of, and how you use your trading style to approach every trade is crucial in creating the most successful trading experience– whether you execute traditional trading or trade using contracts for difference (CFDs).
Your trading style will significantly alter various things about your trading experience. For example, two investors both trading CFDs mightalter the number of trades they open, the length of each position, and the goal for every trade.
In this article, we’ll discuss the various different types of traders, to help you better understand how to execute each trading style for maximum chances of profit.
Day trader
Day trader is one of the most popular types of trader, and involves only executing trades within a 24-hour period.
With day trading, the number of trades you open is not necessarily crucial. The thing which defines this trading style, is regardless of the number of positions, they must be closed by the end of the trading day.
Day traders aim to profit from the daily fluctuations in the market which, depending on the market you choose, can provide substantial profits if successful.
Day trading can help you to have full visibility on how each position is performing, as opposed to having trades active overnight where the market could drastically change without you knowing.
Position trader
Position traders focuses on securing profit over a prolonged period of time.
With position trading, you only open a few positions at one time, and these positions are kept for a lengthy period. This can sometimes be months or even years, for each individual position.
The goal of position trading is to identify long-term trends in a market, hook your position onto this trend, and ride it for a long period of time until you’ve gained a huge profit from it.
Not only does this strategy require focus and patience, but you also need reliable analysis of the market. Since your positions are open for a long period, you need this to help you know when to close, or whether any changes in the market are momentary.
Scalping trader
Scalping traders are essentially the opposite of position traders, as they aim to make as many short-term profits as possible.
With scalping trading, you would open multiple positions at the same time, but only hold the positions for a very short period of time. This could be for a few minutes, or even in some cases, a matter of seconds.
This trading style helps you make many small profits from quick movements on the market, which if done successfully, can help you accumulate a larger profit overall.
Financial markets are constantly changing, and even the shortest periods can have drastic asset movements, which a scalping trader can take advantage of.
Scalping trading is also a popular strategy for the forex market, such as when trading Great British Pounds/Confoederatio Helvetica Franc (GBP/CHF), due to its highly volatile nature in short periods of time.
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The type of trader you are, and how effectively you execute your trading style, is essential to the success of your trading journey.
With an understanding of the different styles, you can now find a more accurate approach to every trade, and increase your chances of profit.
