4 Styles of trading explained

A few articles ago I wrote about the differences in mindset between an investor and a trader. In this article I will go deeply further into this and explain the 4 major trading styles that are common in the markets. You will have a good understanding of what each style encompasses and how they differ from each other.

Position trader

Position traders usually refer to large spot holdings, in which an individual, a group of traders or an institution seeks to accumulate an asset and hold it over a longer period of time. 

Typically, they are more like investors. The position traders care little for fluctuations on a smaller time frame basis, but instead seek to balance their inventory, and are looking after slower but more consistent returns over time. 

The main activity of a position trader revolves around assessing the risk of holding the position for a larger time frame, and therefore puts a heavy focus on aggressive hedging practices.

Swing trader

A swing trader is more active on the mid-term timeframe and looks to enter into positions at significant price levels attempting to trade pivotal highs and lows in price. 

A swing trader spends time on analyzing the mid-term fluctuations such as a 4H or Daily timeframe, typically spends time on analyzing charts on a daily basis and planning ahead of time for the next possible play. G

Generally a swing trade takes anywhere between a few days and a few weeks. This is heavily dependent on the sentiment of the market that is present at the time and its volatility. Generally the swing trader works with zones and relatively large targets.

Day trader:

A day trader is the type of trader that is deeply connected to the daily price fluctuations, and takes on multiple different positions in a single trading week. 

A daytrader spends the majority of her time analyzing the charts, watching the news or seeking other relevant information that can help give an edge in the market. Daytrading is much more demanding and time-consuming than that of a swing trader or daytrader.

The ideal definition of a daytrader would be: A daytrader starts the day without being in a position and ends the day in the same way. A keen eye is needed in order to determine realistic targets for where prices might travel within any given day. 

Scalp trader:

A scalp trader trades in the intra day time frames and makes multiple trades within the day. 

Scalp Traders are typically those that trade, analyze and trade within the heat of the moment, syncing up fully with the heart of the price action as the orders flow in and out of the market generating the price swings up and down throughout the day. 

Scalp trading is one of the most difficult styles of trading. Price on the lowest timeframes can move extremely fast, especially in crypto.It requires an extremely and thoroughly disciplined trading philosophy as well as exceptional chart reading abilities to make split second decisions.

Which one is the most profitable?

It is the most considered question. But in the end they can all be very profitable. 

A swing trader might take less trades, but can make large gains, whereas a good day trader can make the same percentages slightly faster, but generally has more risk exposure as every new trade requires a trader to take on risk. 

During my trading career, I have come to know extremely profitable position traders, and scalp traders manage to get the same % yields with trading countless 0,3% moves. 

So the answer must be sought somewhere else. I reckon the style that is most profitable is the style that fits your personality and personal daily life best. Other people’s success and style does not mean this will work for you, and vice versa.

Looking to know more?

Follow me on twitter: https://twitter.com/ccpool_mike

Get started on Bitget through this referral and get up to 3000 USDT payback: https://partner.bitget.com/bg/footyfloors


The information provided above is not financial advice but for educational and entertainment purposes. Please do your own due diligence or consult a financial advisor before investing in any digital assets.

All opinions expressed on Bitget’s Soapbox (also known as the ‘Soapbox’) are opinions of individual traders using the Bitget platform, and do not reflect the opinions of Bitget or its affiliate companies and partners. The Soapbox author’s opinions are based upon information they confirm to be reliable, but neither Bitget nor its affiliates warrant its complete accuracy, and it should not be relied upon as such.