One’s trading style differs from how long they hold stock.
- Position Trading is long term form of trading where stock and bonds are kept for a long period of time – months to years.
- Swing Trading is short term, the trader keeps the securities for days to weeks.
- Day Trading is a form of trading where the trader buys and sells stock on the same day till the market shuts down.
- Scalp Trading is when the holding period is a mere few seconds to minutes. These traders make money out of small fluctuations in the price bars.
- Traders do not have to be only of one type – they can be a combination of many. The kind of trader you are depends on various factors like amount of money invested, time constraints, risk tolerance, and experience.
- A swing trader would check his trades once a week and act on it occasionally, while a scalp trader would be devoting all his time and try making profits every second of the day.
- A trader could also be a combination: she could have long-term investments that accumulate over months, as well as have a certain amount allocated for day trading.
- It is important to figure out what type of trader you are before you open an account.