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#1 05-04-2016 17:26:33

johnedward
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From: Paris - France
Registered: 21-12-2009
Posts: 2495
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A comparison of trading styles

A comparison of trading styles


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Article sponsored by Tradeo



One of the great advantages of social trading platforms like Tradeo is the ability to see other traders' orders. As part of its unique system, the Tradeo platform provides social profile for its users in order for them to better understand the leaders they are following. In this manner, knowing whether a trader is more aggressive or moderate in his investment dealings helps beginners to make a better decision regarding who to copy and who to follow.

As no investment in the Forex market is composed solely of profits, a trader can go through different periods in his career. Therefore, tradersí strategies can change a lot over time, depending on a variety of factors.

However, traders often develop a specific type of profile when they trade over their careers. Knowing these types of trading profiles is helpful to determine how much exposure to risk a copying trader can handle and what his strategy will be. It will also help him make better decisions knowing he has a plan to follow.

Below are the 5 main trading profiles youíll encounter online. Which one are you?

●    Fundamental Trading: This, together with Technical Trading are by far the most common types of trading. Trades who are of the Fundamental type make fundamental analyses on companies based on their financial reports, mergers and acquisitions, and stock splits. This traditional type of trading has been used the most and is most suited for beginners.

●    Technical Trading: The technical trader bases his decisions on charts, graphs, and all accompanying calculations that come along with them. While usually still being influenced by Fundamental types of analyses, the Technical Trader looks for signals of convergence and divergence on the charts and graphs to see if heíll buy or sell. This type of trading requires a lot more knowledge and expertise than the previous one.

●    Scalp Trading: Scalpers are traders that try to earn in small relative increments in their positions. They make sometimes hundreds of trades each day in order  to try to win on the bid-ask spread (meaning, how much people are willing to pay for an asset - how much sellers are willing to sell it at a given moment). This type of trading is more difficult due to order costs and the necessity to have a quick hand on the trigger. It definitely isnít a type of trading advisable for beginners.

●    Momentum Trading: Characterized by their patience, Momentum Traders wait for the perfect opportunity to invest. They remain on the lookout for assets whose value is taking a huge swing (either up or down) in order to make a profit on them. This type of trading isalsorecommended for beginners.

●    Swing Trading: Usually keeping their positions for more than a day, Swing Traders also display Fundamental traits to base their decision upon. They are usually positioned between day trading and trend trading, will try to make a profit on the short or medium term.

Of course, in the long run, traders can display many different styles and all analyses contribute to the decision making process. Tradeo advises traders to study which type of trading they identify themselves more with and focus their career on that. These types of trading are not written in stone and changing strategies midway is possible, but itís important that traders specialize themselves in one type and master it.

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