What is trading style? Your trading style in forex determines who you are. Every trader has a style that is different from one another.
Starting from different pair options, different time frames, different indicators, different margin settings, the period of holding different positions.
Or different also in the way of determining Stop Loss and other decisions regarding trading. Psychologically, a trader’s style describes the psychological condition of the trader.
Usually, traders who are relatively aggressive will also trade aggressively as well. While traders are relatively calm, the style is also relatively calmer.
Generally, a trading style will also determine your comfortable during trades, learn more about trading style, and choose one that suitable for your own comfort zone in trading.
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Trading Style Explained.
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Trading is 90% psychological, 10% technique, so, mastering the high technique, the psychological condition of the trader will affect the trading style.
Therefore the first thing to be trained is about mastering trading psychology. Regardless of the conditions in your trading journey, keep smiling while you’re trading.
Because with a smile, the effect is positive on the decisions we make. Facing all situations with a smile makes us able to take more appropriate action.
Next is patience and precision. A trader must be patient and careful in observing pairs movements. Besides, traders must be disciplined, learning to apply risk management is only a maximum of 2% in each trade.
By practicing trading methods with suitable psychological conditions, you will find your own style.
Trading Style Determines Trader’s Profit.
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One of the success factors of a forex trader is choosing the right trading style according to the personality. Emotions, and abilities of the trader itself (both capital and long-term or short-term analytical skills).
The possibility of one trading style is not always the same as the other traders’ style as well as its success.
In other words, a certain trading style is very suitable for a trader but does not necessarily make a success if used by other traders.
Actually, to find a suitable trading style is to recognize and know and understand yourself. For example, a patient person tends to choose a long-term trading system.
While a trader whose level of patience is less will be more right to choose a short-term trading system. The main idea is to know yourself.
Broadly speaking, trading styles are divided into three categories, short term trading, medium-term, and long term trading.
Scalping forex trading style
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This is a forex trading style in a short or short period of time. Scalping techniques are easy and considered profitable. Most scalpers will choose any pair with the low-cost spread.
Scalping is the most widely applied or used because able to generate profits quickly. But it must require high-speed proper analysis.
This style does not target a lot of profit every time you open a position, for example, only taking profits as much as 10pips. About pips, you can read What is pips in forex?
However, they open orders many times so that the profits gained will get more. To prevent over trading, scalpers will be recommended to choose low leverage.
Users of scalping trading styles are called scalpers, this technique usually requires traders to spend more time monitoring the charts.
A scalper must focus on looking at the chart when the transaction continues and must be strong in controlling his emotions. Not a few of these techniques cause a lot of losses when the analysis was missing.
Usually, scalping is applied to brokers that provide low spreads so that any open order with a little target can still giving a profit.
Advantage of scalping
- Able to generate profits quickly, using scalping can generate large profits in a short time if you know the analysis of price movements quickly and precisely
- Limiting risk, using a short trading system also needs to implement a small stop loss as well, so that it can protect funds if it turns out the analysis misses.
- Requires high accuracy analysis.
- Have a loss quickly if there is a mistake in the analysis.
Day trading style
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A day trader is a trading style that is actually similar to scalping due to opening a trading position that was never more than one night. But the target of profit achieved is greater than scalping.
The difference is that day traders open one or more different trading transactions throughout the day with the aim of obtaining profit targets of up to 50 pips from each transaction.
This daily strategy is able to run very well when the market is in a strong trend. Traders will combine fundamental analysis and technical analysis of analyzing the trend ahead.
Advantages of day trading
- Trading strategies with day trading have many opportunities that can be taken with the look on multiple pairs as day trading for beginners.
- Even though prices are on a rising or falling trend, a day trader is usually able to benefit from it.
- Day trading doesn’t think too much about long-term trends, they will only consider the current trend.
Disadvantages of day trading
- Must monitor price movements several times every day.
- Not suitable for traders who have aggressive characters.
- Also needed is a larger amount of funds to prevent a margin call when a floating loss occurs.
Swing trading style
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Swing trading style is a trading style that opens trading positions ranging from 3 days to 30 days to hold. This trading style includes the most popular trading styles among investors as well as global day traders.
Swing trading strategies based on a variety of short-term movements that occur in the forex market. Which makes traders have to be able to react quickly to changes in trend changes that occur.
Swing style emphasizes the ability of traders to read price patterns compared to the actual value of price movements.
The advantages of swing trading
- If implemented properly, the trader will experience a smaller risk compared to scalping and day trading style. It’s suitable trading strategies for beginners.
- When the market is in a state of stagnation, it is still possible to get profits from swing price movements.
- Having a flexible schedule like a day trader, the most important thing is to do some analysis and market research after work and place new trades the next day when the market opens.
- Swing trading has the potential to provide an attractive profit.
A disadvantage of swing trading.
- It takes a long time to reach the target.
- Needs extra patience to do a trading plan.
- It requires more capital to hold floating price movements.
Position Trading trading style
Read also Forex scalping cheat sheets
Position trading is usually used by portfolio investors because of the following reasons: Trading positions occur over a long period of time from month to year.
Actually, this trading style analyzes many factors that can determine future price predictions and are expected to know long-term trends in a currency pair.
This trading style requires a very large capital investment to avoid a margin call when the price reverses against the trading position taken.
How to trade like this is suitable for use by traders who do not pay too much attention to market conditions.
When using a style like this, it is necessary to buy when the price is corrected low and sell it when the price is high.
Advantage of position trading
- No need for market monitoring every day, position traders may leave their orders for months.
- It does not cause excessive emotion, this is suitable for those who have patience with set and forget the trading plan.
A disadvantage of position trading
- Requires careful calculations to determine the amount of capital to withstand long-term price movements from lowest to highest
- It requires super extra patience because of the high target profit.
Choose the most comfortable trading style.
Consistency is an important factor in forex trading.
When traders find in a style that is suitable and profitable, excessive self-confidence at any time can change your trading style, and the results lead to a loss. Make yourself as comfortable as possible so we can stay consistent with your trading style.
Finding a style trading that suits your character and routine requires patience that is not enough for just one or two months.
However, if you can determine the style of trading that suits your character and can build it into a trading system that has gone well, your patience and perseverance will pay off in the future.
Take note if forex trading is not an easy way to get real cash money without proper knowledge and experience, if you are as beginner trader it will very advisable to learn forex education. This is as basic preparation because in every business you will fail if you don’t have knowledge about the business.
Use a demo account to learn how to trading for success, finding your own trading style by practice, and implemented one style trading. Keep practice not only a month or two months in demo trading. Because so many trader fail to maintain an account for six months, its recommended to practice in a demo for more than six months.
Trust with your own selves if in every business always opened for success, choose the one line, and stay to the line and learn with a focus on your goal, you will find.
Are you ready to start trading?