List of Trading and Investing Styles with Descriptions
A trading or investing style will dictate which financial trading instrument should be used. Most traders do not have a well-defined investing or trading style OR they are attempting to use a style that is unsuitable to their personalities, goals, capital base, education, and experience.
The primary Trading
and Investing Styles are the following:
Intraday Trading
This
the fastest paced trading style that requires the highest skill level in
terms of chart analysis, Technical Analysis, risk assessment, order calculation
and execution, money management, and self-discipline. Professional level
education and extensive experience over many years and thousands of trades, is
necessary for consistent success with intraday trading.
It is not for beginners
or intermediate level traders because this trading style is the most demanding in
time and commitment. It also requires professional grade computer
equipment, execution software, and a large capital base. Intraday is the
highest risk trading style. Typical lot sizes are 5000-50,000. This
trading style group also includes High Frequency Trading Firms.
Go to watch the Basics of the Stock Market for New Investors and Beginning Traders Webinar Lessons.
Day Trading
This is very fast paced trading style requires high
skill levels in chart analysis, Technical Analysis, risk assessment, order
calculation and execution, money management, and self-discipline. This
trading style requires advanced level education, many years of experience with
hundreds to thousands of trades. It is not recommended for beginners or
limited experience traders. Day trading requires near professional grade computer
equipment and execution software, a moderate to large capital base, and is a
high risk trading style. Typical lot sizes are 1000-10,000.
Velocity aka Momentum Trading
This fast paced style requires moderate to high skill levels
in chart analysis, Technical Analysis, risk assessment, order calculation and
execution, money management, and self-discipline. With sufficient simulator
trading experience, intermediate to novice level traders can succeed with this trading
style. A minimum of 2-3 monitor computer system linked to a fast reliable
execution system is sufficient, a moderate capital base is also
sufficient. It is a moderately high risk trading style. Typical lot sizes
are 1000-10,000.
This is a moderately fast trading style which
requires moderately high skill levels in chart analysis, Technical Analysis,
risk assessment, order calculation and execution, money management, and
self-discipline. With sufficient simulator trading experience,
intermediate to novice level traders can succeed with this trading style. A
minimum of 2 monitor computer system linked to a reliable execution system is
sufficient. Swing requires sufficient capital to swing 500-5000 shares at
a time.
Go to the Learning Center and watch the Swing Trading
Training Video, for presicion entry and exits.
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This is the lowest risk and easiest short term trading
style to learn. It is suited for beginners to advanced traders, and to
traders with limited time or time constraints. A moderate skill level of chart
analysis, Technical Analysis, financial analysis, Institutional holdings
analysis, growth analysis, risk assessment, order calculation and execution,
money management, and self-discipline is adequate for this trading style. It
requires a low to moderate capital base with average lots ranging from 100-5000
shares. This is a low risk trading style.
Intermediate Term Trading
This style is a longer version of the position trade which
extends to less than 1 year hold time. It is suited for long term
investors who are just learning to short term trade. A low skill level of
chart analysis, financial analysis, Institutional holdings analysis, growth
analysis, Technical Analysis, risk assessment, order calculation and execution,
money management, and self-discipline is adequate for this trading style. A low
capital base will suffice. Lots range from 100-1000 shares average. Beginners
will find this trading style lower risk with good Return On Investment
ROI.
This is the lowest of all risk so long as Technical Analysis
is used in conjunction with Fundamental Analysis, and cyclical trend patterns
are applied. Financial, product cycle, business cycle, and Technical Analysis
are important for long hold investments. A low capital base will
suffice. Lots range from 100-1000 shares average. Beginners will find this
investing style lower risk with good Return On Investment ROI.
Go to TechniTrader.com and learn about the Investment and
Retirement Course, to experience for yourself the excellence of TechniTrader
education.
Go to the
TechniTrader
"Investment and Retirement Course"
Note
Although most traders are concerned only with making monthly
income from financial markets, everyone needs a retirement account. Therefore
knowing how to properly invest for the long-term is necessary in addition to
your short-term trading style.
Choosing Your Trading Style
Before selecting a financial trading instrument you must
first choose a trading or investing style. Selecting your style must be
based not on dreams of great wealth, or on what you perceive to be the most
popular instrument, nor should it be based upon what you believe friends and
family will admire.
A trading or investing style is based upon risk
tolerance, time available to trade, amount of capital, level of financial
education, experience in trading, and individual personality.For example just
because you may want to Day Trade, does not mean Day Trading is right for you.
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Trade Wisely,
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Stokes CMT
Chartered Market Technician
Instructor and Developer of TechniTrader® Stock and Option Courses
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