Wanting to make a mark as a trader, there’s one way to develop yourself distinctively.
As individuals, we are all unique and distinct. Our character gets shaped by our journey, actions and behaviors. Most well-known master traders have carved out their space over time and get known for their very distinctive style of trading the markets. This is the single most aspect that makes them stand out and become successful and well known in their chosen field.
What is Trading Style?
Each market participant gets started by emulating their market idols. Beginner traders can often get lost on where to start, what instrument to trade, what time frame. The possibilities can be confusing and overwhelming.
Eventually, the goal is to grow as a trader and develop a unique personal style that’s in sync with one’s personality and utilizes one’s latent talents.
With the following popular styles of trading, choosing and working on the one that is most suited to your personality profile makes for a good starting point in developing and understanding a style that’s best cut out for your personality.
Let’s look at what kinds of trading styles exist and for whom they are best suited.
Scalping means to trade very fast in anticipation of making quick, small, and successive gains. It basically implies chipping away consistently and rapidly.
Trades get opened and closed very fast, in any direction, and often last for several seconds to a few minutes. Traders typically use leverage to take large positions, therefore the risk is high.
Scalp trading is generally best suited for action-driven traders, who possess excellent and fast decision-making capacities and brilliant market reading skills.
Needless to say, this also means the ability to consistently sustain high levels of stable focus, attention and possess strong execution capacity.
Intraday trading means to buy and sell the stocks on the same day itself. The purpose is to make gains while striving to profit from the day’s larger moves. Trades may be taken in both directions but are always closed before the end of the day’s session.
Day trading is often preferred by traders who may want to take leverage, but want to avoid the risk of overnight volatility. Active traders who possess fast-thinking abilities along with higher levels of focus and concentration often love to trade the markets actively and daily.
Ideal requirements here would be, a high level of market reading skills, adequate capital, and reflexes. These types of traders love to sleep peacefully at night and are often found boasting of being free from the worry and stress of overnight market swings.
Short-term trades are positions that generally stay open for a few days to several weeks in an attempt to take advantage of the wider market moves, called swings.
Trades are one-directional and taken with an intent to profit from a larger set of swing moves and patterns that frequently occur in the markets.
Traders need to have the ability to stay calm, composed, and tolerate the higher risk of volatile moves that generally are experienced when trading these relatively larger time frames.
Swing trading benefits from minimal screen time needs less monitoring and is one of the most preferred time frames by a large number of traders and institutions.
Investing or position trading as this is known is a form that’s most widely used and loved, purely because of its simplicity. Trades get carried over from several weeks to years and even decades hence this is often referred to as long-term investing rather than trading.
These trades are one-directional, generally minimal time is needed in this scenario for monitoring and managing the portfolio.
Traders have various styles around monitoring their investments on these larger time frames. Monitoring the larger trends and their cycles, some investors even prefer to add to positions and attempt to milk and profit from strongly trending moves.
It’s Warren Buffet’s favorite style of “Buy and Hold” strategy of holding stocks over the long term.
This style is ideal for people who don’t want to be bothered by short-term moves, volatility, and stress.
Developing your style:
If one wants to get better, it makes excellent sense to work on developing one’s own unique style.
By working on exploring one’s abilities and developing them, the trader stands an excellent chance of inculcating sharp skills that lead to being consistently profitable over time, since the focus area becomes very narrow.
Begin by finding out what’s already there, research the various styles and the trading techniques under the style.
Experimenting is the key to understanding what works best for you.
Become fearless by managing risk properly and adopting the risk first mentality. Try out different approaches, and creative ways to trade.
Over time, study what is working for you, what styles you are enjoying, and being profitable at. Adapt, refine and improve what’s working for you and drop the others.
By choosing a certain style and sticking with it for a longer period of time, you refine, improve, develop the skill sets and gain a deeper understanding of the chosen time frame, the trade setups, its risk management, in a manner that’s vital to survival and success in the markets.
Eventually, this journey can take one deeper into a narrow zone that will lead to specializing and a deeper and richer understanding of the chosen style of trading.
There’s nothing new under the sun, just your approach, and mindset that counts.