Trading Styles

Trading Strategies give you the possibility to diversify and trade using various tools. You can opt for a short-term and active strategy or for a longer-term and less active one. Let’s check a few of them and see which one is right for which kind of trader.
It’s vital to mention that when you pick a trading strategy, it’s best to stick with it, regardless of whether it seems that things are not going your way. In other words, if you opt for Position (long-term trading), and suddenly notice a negative market fluctuation, it doesn’t mean you should drop your plan and frantically try to change direction.
At times, highly-experienced traders can use a mix of trading styles. However, before you try it yourself, you might want to start by slowly understanding the markets and mastering at least one strategy.

Day Trading

One of the most popular trading strategies, day trading implies holding no overnight positions. In other words, positions are opened and closed within the same day. Making use of technical analysis is preferred by traders who are worried to keep positions until the next trading session.
Traders that use this method like to see a fairly frequent growth of their profits, or simply don’t have the patience for swing or position trading.

Position Trading

Position trading, also known as long-term trading, abides by the ‘buy-and-hold’ principle. It requires stamina and a cool head to withstand periods of market volatility, and can result in positive returns. The position trading strategy can last for months or even years.

Scalping

A strategy frowned upon by many, and even explicitly forbidden by legitimate brokers – scalping – is the most active trading style. It is mostly preferred by attentive and impatient traders, who have free time to keep the markets under close watch.
Constant focus and a risk-seeking personality are the main traits of a successful scalper, as not just tens, but hundreds and thousands of trades can be executed within one trading session, often even in opposite directions.
The goal is to capitalize on minor fluctuations, in order to obtain a legitimate profit at the end of all executed transactions. Scalping is considered to have an ‘abusive’ nature and to pose a high risk. This might be the reason why intermediaries are reluctant to accept scalpers, and tend to freeze their trading accounts upon exposure.
Tip: For further information on trading styles, as well as for tips and tricks on finding “the one for you”, make use of your broker’s educational resources, or contact them to make an enquiry.
 






Trading Explained

Trading means exchanging one product for another, and has been around since the dawn of time. The process of goods’ exchange dates back to the late Babylonian period, long before currencies, or the foreign exchange market.
A financial market today can be defined as an intermediary space, where buyers and sellers are brought together for the purpose of trading assets, which are, of course, way more than just currencies today. From crypto to stocks, shares and commodities – the choice are numerous, and so are the ways to trade every asset class.

Asset Classes

As mentioned above, although Forex refers precisely to currencies, the trading arena is also filled with other assets of choice. Stocks, commodities, indices and cryptocurrencies – you name it. Each of these is referred to as an asset class, since it groups together financial instruments with similar characteristics.

Currencies

Currency trading is done in pairs. Currencies are pegged against one another, with one being bought and the other sold. The most common pairs include EUR/USD, GBP/USD, USD/JPY, but the selection is vast. Traders make their predictions on which currency will rise and which will fall, based on a collection of technical (indicators, charts) and fundamental (economic events, news) analysis.
The currencies market operates 24 hours a day, excluding weekends and have a total of three trading sessions: US, Europe and Asia. Trading schedules differ based on country and currency.

Cryptocurrencies

Unlike currencies, cryptos are handled by a digital ledger, versus financial institutions. This digital ledger is known as the blockchain, which is decentralized. This means that there is no financial authority that oversees the operations. Instead, the blockchain uses protocols to validate and encrypt transactions.
Numerous cryptocurrencies are available for trading, with the most common ones including Bitcoin, Litecoin, Dash, Ripple, Ethereum, Monero and Stellar. The high volatility of cryptos is what makes them appealing to investors, while at the same time posing the logical share of risk.

Commodities

The commodities market is generally separated into soft and hard commodities. Soft commodities include products of natural and industrial growth (coffee, cocoa, sugar, corn, wheat, rubber etc.), whereas hard ones are comprised of metals and energy products (gold, silver, oil, natural gas etc.)
The main driving forces behind this market are supply and demand, as well as political and economic events, or even the weather, which can lead to supply disruptions, tax increases and other consequences.

Shares

The stock exchange came to be when companies started to go public. The main reason companies do so, is in order to raise financing for further expansion. Stock fluctuations depend on a company’s financial standing, the economic and political environment, forecasts on future profitability, statements from company officials, as well as a variety of other factors.