There are four styles of trading styles, i.e., day, swing, position, and Scalping. The difference in the styles depends on how long the trades last. For instance, day trades take from a few seconds to several hours, while scalping trades take a few seconds and, at most, several minutes. Swing traders take a few days, while position trade lasts from a few days and can last several years.
Choosing an options trading style that fits a personality is a daunting task for a new trader, but for their eventual success, they have to choose. For a new trader, and sometimes an experienced one, and you feel like you have yet to find your trading style, below we outline the personalities compatible with the various trading styles.
Scalping is a rapid-fire option trading style. Scalpers typically trade within a few seconds, and mostly in the opposite directions, i.e., the trades last long one minute, but are short in the next minute. Scalping is suitable for active traders who make instant decisions and act fast on the same choices. Indecisive people cannot become good scalpers, but impatient people are often the best.
They expect their trades to come to fruition immediately and exit the trade as soon as it does against their expectations. A successful scalper needs concentration and sharp focus. Scalping does not suit people who get easily distracted, so if your mind strays a lot, scalping options trading style is not for you.
Day options trading style is more suited for traders who prefer to start and complete tasks on the same day. Most day traders would not be comfortable making position or swing trades. The day trader would be agitated, knowing they had an active trade that might get affected by price fluctuations in the night.
Day trading needs a lot of dedication. You have to ensure you dedicate several hours each day for day trading. If you are the type that gives up quickly, you might find it extremely hard to make any profits from it. If you like short cuts, day trading is not your style. It takes a while to make some gains, so if you intend to quit your job and make this a full-time job; you better make sure you have some savings to fall back on before it picks up.
Swing options trading are compatible with personalities who have a lot of patience to wait around for trade. Once swing traders enter a trading option, they want results quickly. Swing traders most often hold their trading sessions overnight. These trading options are not for people who would get jittery holding a trade remotely from their laptop/computer. Swing trading needs a bigger stop-loss in comparison to day trading, so a swing trader needs to have the ability to stay calm with trade against them.
Position trading options take the longest time and have trades that prolong into several years. Position trading is perfect for extremely patient and calm individuals. Position trading requires one to be able to ignore popular trends and opinions.
A single position trade often holds into bull and bear markets. For instance, you may need to maintain a long position trade over a year, while all the while; the public opinion is that the economy is in recession. If you are the type of person easily carried by people’s views, the position trading is the wrong trade for you.
Choosing trading options that suit you requires you to have the flexibility and open mind to recognize when a trading style is not for you. It would help if you also had some consistency and ability to stick to the style that suits you even when it is not doing very well.
The worst mistake that novice traders make is to switch trading styles and systems as soon as they sense trouble. Traders who keep changing their trading style or system invite losing streaks. Once you settle into your preferred method, stick to it, and you will see rewards after some time.