I’ve just got a question here from Lauren, asking what are the different trading styles and which ones best suit beginners? Well, the main trading styles you can really divide into three.
So first of all, you have people who are scalping or intra-day trading. For someone who’s scalping or intra-day trading it means they open and close their trades within the trading day.
So for example, when we’re here on the analyst squawk talking about a currency pair, we would usually be talking about that from an intra-day perspective. We have the average daily range, high and low, and we identify places of buying and supporting and taking profit. And for the large part, those are intra-day positions which we are talking about. So that’s the first style. The second style would be swing trading.
Now swing trading is when you would be using sort of the four hours and the daily charts, and you’re expecting to really hold your trade position for between two days, and maybe up to, say, two weeks. That would be a typical swing trade position. And finally, a position trader would be someone who’s holding their trades for weeks and months. So they’re the three major different styles that you have in trading.
Now, in terms of which one is best for a beginner, it really depends how much time you have. So if you have time, around the day, then you would look potentially at intra-day trading or scalping. Because you would have the opportunity to be at the feed, you need to be tuned into what the latest news, coming across the squawk news, and obviously that provides opportunity because if you’ve suddenly got some news that you weren’t expecting, that can be an opportunity to suddenly profit on a scalping trade. So that’s one potential, the intra-day trader.
The second potential is swing trader. Now you’d need to be able to check on your trades maybe once or twice a day for swing trading. You’re obviously gonna be aware of significant events that could alter the bias for a currency pair that you have. But giving yourself once or twice a day should be sufficient. So that would be ideal, say, if you’re working in a normal job and you can’t be at the terminal, then a swing trade would be ideal for a beginner in that situation.
Finally, position trader, you may only need to drop in and check your positions weekly. You could do some research on the weekend and you could limit your research to that. Obviously being aware of very significant events coming up in the week ahead, and you could just drop in to see how your position goes and to see what’s relevant at that time. So there isn’t a right or a wrong answer here really in terms of which one best suits a beginner.
Though I would say, if you are a beginner trader, there is something nice about, if you have time, looking at intra-day trading because you get to see that principle playing out, the principle of a strong currency against a weak currency, how news impacts price. So that can be really important for accelerating your learning curve.
But of course, everything’s a lot quicker and you’ve gotta make quicker decisions, you’ve got more information to not only analyze but also get in a muddle with. So you might think, “Well, I’ll go for a swing trading position “and drop in a couple of times a day.”
So that’s the basic different styles of trading there are and that is also my opinion on what best suits a beginner trader. It really comes down to how much time you have to give. So I hope that helps.