Starting trading without experience is not without difficulties. It takes a lot of time, effort and knowledge to make a profit. Mostly everything you want to know about trading is available for free on the Internet. You should study it well and add to your information continuously. Your trading performance depends on the trading style itself, the type of profits you are looking for, and the amount of risk you are willing to take. Thus, you can develop your own strategies and goals, to achieve the best possible results.
Your trading style depends on your personality, traders who want to start their first trading will be happy to know that there are a variety of styles and strategies tailored to specific personalities. Here are some trading techniques you can try based on your personality:
This type of trader mainly focuses on initiating and completing trades on the same day. That's you if you prefer to make one trade a day and close it before the day ends even if it means staying up late at night.
In general, day trading is categorized as a short-term trading style due to its nature - the intent to reap returns from small price movements.
You may be a good fit for the day trading style if you are persistent. The strong day trader is persistent because they like to stick to a certain style/strategy when it is convenient for them.
Discipline – Day traders can manage their plan of how they handle their trading and what they do during market hours. They have a strict schedule to follow every day without fail. Also, it is important for day traders to be sharp because day trading is known as the game of minutes. Traders cannot be pensive or apprehensive as they must act quickly when they see the opportunity.
A position trader specializes in getting a long-term outlook even if it means days, months or years. Thus, it is known as a long-term strategy that pivotally focuses on fundamentals, however, technical principles may also be useful.
If you rely more on position trading, make sure you understand how economic factors affect the markets and overall technical understanding, which is very important in predicting trading plans.
Patience is a virtue for position traders because they will not make short term profits but rather they need to be very patient to achieve your profit targets. It is best suited for those who already have a full time job and do not want to worry about price fluctuations every day. This trader's goal is to make profits in the long run.
Swing trading is a trading technique that attempts to capture short to medium term gains over a period ranging from a few days to several weeks. Swing traders primarily use technical analysis to look for trading opportunities.
Swing trading usually involves holding a position for more than one trading session, but usually no longer than several weeks. This is a general time frame, as some trades may last longer than 2 months, however traders may still consider them as swing trades. Swing trades can also occur during a trading session, although this is a rare result that results from highly volatile conditions.
The goal of swing trading is to capture a portion of the potential price movement. While some traders look for volatile instruments with a lot of movement, others may prefer quieter instruments. Either way, swing trading is the process of determining where the price of an asset is likely to move next, entering a position, and then capturing a significant portion of the profit if that movement materializes.
Swing traders are usually meticulous and vigilant - they are willing to take fewer trades but have very good preparation and strategies since they are very organized and keep up with the trends.
Scalping is one of the most popular strategies in trading. An pushy trader, also known as a cyclical trader. While a swing trader will wait and hit the target, a scalper will also do so but differs in the sense that they are fast-paced and opportunistic in identifying trends and price movements.
Scalping users always keep you on the edge of your seat small opportunities are their goal. They are always quick and able to make accurate decisions. Often speculators have focused on profits from small changes, they are very focused and therefore are on their finger tips as well.
If you get swayed quickly, this is not for you as it is a risky process. It is very important to be level as you see that you need to always be very focused. Speculators are usually selected because they can make decisions quickly, if you are hesitant, then speculating is a no-go.
This trading style is very different from the rest, as algorithmic traders mainly focus on technology, software and technical tools. They don't really investigate the basics of trading, but rather try to make use of computing power and mathematical units.
If you are an attentive and observant person, this works best for you. Through their observation skills, they will be able to improve their returns. A successful algorithmic trader keeps himself centered and often realistic, taking calculated risks and strategizing his next move beforehand.
Their constant attitude is their advantage because they take a pragmatic approach to trading, they know when to avoid making trading decisions and usually stay out of choppy markets.
Momentum traders tend to buy or sell depending on the strength of the market price. They often focus on returns from trades that move significantly upward. The goal is to find profits in short-term uptrends and to sell when it starts to lose momentum.
Usually, traders buy when the instrument is low and sell when it is high but this is not the case with momentum traders – they buy when the price is high and sell when it is higher. Momentum traders are usually very focused and able to quickly identify market trends.
If you are someone who tends to get distracted easily, this is not for you. Besides, these traders are often able to absorb information in a short period of time. They will constantly monitor and look for signs of market movements as well as keep abreast of the latest trends and developments to take advantage of potential moves.
As you can see, trading styles depend on your financial traits and goals. Different styles fit different people. Thus, it is important to understand who you are and what styles suit you best.
Don't worry if none of these styles suit you because there are a plethora of styles and strategies available - there is no one size fits all. Feel free to dive in and research the various other methods mentioned above!