What Type of Trader Are You?Posted by Boje McCullough on January 3rd, 2021 There are countless ways to profit off of trading stocks & crypto as a trader. Trading strategies help you organize those techniques into a coherent framework that you can follow. This way, you can continually monitor and optimize your stock & cryptocurrency strategy.The three main schools of thought you’ll need to consider when building a trading strategy is technical analysis (TA), fundamental analysis (FA) and EngineeringRobo. With a solid trading strategy that you will get from EngineeringRobo , you’re more likely to achieve your trading and investment goals. Since there are many different trading strategies, we’ll cover some of the most common ones. This article mainly focuses on stock & cryptocurrency trading strategies. However, these may also apply to other financial assets, such as forex, options, or precious metals like gold. So, would you like to devise your own trading strategy? This article will help you with the basics of how you should approach speculating on the crypto markets. With a solid trading strategy, you’re more likely to achieve your trading and investment goals. What is a trading strategy? We can describe a trading strategy as an extensive plan for all your trading activities. It’s a framework you create to guide you in all your trading endeavors. A trading plan can also help mitigate financial risk, as it eliminates a lot of unnecessary decisions. While having a trading strategy is not mandatory for trading, it can be life-saving at times. If something unexpected happens in the market (and it will), your trading plan should define how you react – and not your emotions. In other words, having a trading plan in place makes you prepared for the possible outcomes. It prevents you from making hasty, impulsive decisions that often lead to big financial losses. For instance, a comprehensive trading strategy may include the following: � What asset classes you trade ( Cryptocurrencies , Stock or Commodities ) � How much time you spend a day on trading ( 30 minutes, 4 hour or 10 hours ) � How much money you start trading ( 00 , ,000 or 0,000 ) � What tools and indicators you use ( Moving Average , Bollinger Bands or EngineeringRobo ) � What triggers your entries and exits (Trendlines, Support & Resistance Levels or EngineeringRobo's signals) � What dictates your position sizing ( 1%, 2% or 5% ) � How you measure your portfolio performance ( Weekly, Monthly or Yearly ) � What is your risk tolerance? ( Low, Medium or High ) There are four main types of trading strategies: Scalping, Day, Swing and Position, and most successful traders tend to identify and stick to a single approach rather than mixing them up. However, there is also a fair amount of crossover between the four, at least when it comes to using technical indicators or relying on fundamentals. Also, if you are new to trading it is important to look at what is involved in each approach to see how it suits you and your lifestyle! 1.Scalping Scalping is one of the quickest trading strategies out there. Scalpers don’t try to take advantage of big moves or drawn-out trends. It’s a strategy that focuses on exploiting small moves over and over again. For example, profiting off of bid-ask spreads, gaps in liquidity, or other inefficiencies in the market. Scalpers don’t aim to hold their positions for a long time. It’s quite common to see scalp traders opening and closing positions in a matter of minutes. This is why scalping is often related to High-Frequency Trading (HFT). Scalping can be an especially lucrative strategy if a trader finds a market inefficiency that happens over and over again, and that they can exploit. Each time it happens, they can make small profits that add up over time. Scalping is generally ideal for markets with higher liquidity, where getting in and out positions is relatively smooth and predictable. Scalping is an advanced trading strategy that isn’t recommended for beginner traders due to its complexity. It also requires a deep understanding of the mechanics of the markets. Other than that, scalping is generally more suitable for large traders (whales). The percentage profit targets tend to be smaller, so trading larger positions makes more sense. 2.Day Trading Day trading might be the most well-known active trading strategy. It’s a common misconception to think that all active traders are by definition day traders, but that isn’t true. Day trading is a full time job. Day trading involves entering and exiting positions on the same day, and no position is held overnight. As such, day traders aim to capitalize on intraday price movements, i.e., price moves that happen within one trading day. The term “day trading” stems from the traditional markets, where trading is open only during specific hours of the day. So, in those markets, day traders never stay in positions overnight, when trading is halted. Most digital currency trading platforms are open 24 hours a day, 365 days a year. So, day trading is used in a slightly different context when it comes to the crypto markets. It typically refers to a short-term trading style, where traders enter and exit positions in a timespan of 24 hours or less. Day traders will typically use price action and technical analysis to formulate trade ideas. Besides, they may employ many other techniques such as EngineeringRobo to find opportunities in the market. Day traders typically spend more than 6 hours each day to watch trade setups and short term price movements. They use advanced charting systems which are plotted by 45 or 180 minute intervals. 3.Swing Trading Swing trading relates to a style of trading which uses technical analysis as its basis. Unlike day trading, swing traders are happy to run their positions overnight, and can hold for weeks if that is what their preferred technical indicators are telling them to do. In this way, they hope to capture bigger moves than those expected by day traders and this also means that they are generally prepared to take a larger risk in the hope of capturing a bigger percentage return.
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