Today, we will learn about the three most popular trading styles used by traders all over the world.
These three trading styles include: Position Trading, Swing Trading, and Day Trading.
We will delve deeper into each of these trading styles in future podcasts but today, let’s just gain a basic understanding of each of them.
We’ll begin with the long-term trading approach, known as position trading. The position trader’s primary goal is to discover new trends just before they begin to develop. Once the position trader buys a stock or ETF, he may hold that position for several months, or even years, in order to fully exploit the trend. Put simply, the position trader attempts to buy at the lowest possible price and holds until the primary trend is finally exhausted.
Next, there is Swing Trading. Unlike position traders, swing traders are not interested in finding and taking a position in a trend before it develops.
Instead, swing traders seek to carve profits out of existing trends. Swing traders will typically hold a position anywhere from one day to several weeks.
And finally, there’s day trading. Just the name itself makes some people cringe given its reputation for being extremely risky. Like swing traders, day traders spend their research time looking for existing trends. However, instead of attempting to exploit an existing trend for days or weeks, the day trader only seeks to exploit an existing trend for a matter of minutes or hours. Because day traders often employ large amounts of capital on each trade, a small move in the underlying stock is all that is needed for the day trader to earn a handsome profit.
So, what style of trader are you? Well, before you can answer that question, we must first learn a little more about how trends work in the stock market and how to successfully identify them. So, on our next podcast, we will discuss the basics of trends.
Until then, happy trading!
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