The Different Styles of Trading (Holding Period, Timeframe, Products, etc)

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There are 3 main styles of trading, and by styles, I mean the way you approach trading, and this in turn will determine your holding period, timeframe, time commitment, and the products you trade.

Here are the 3 main styles:

• Short-term
• Medium-term
• Long-term
  

Short-term Trading

Short-term trading is mainly for people who are doing it full time, and includes day trading (closing all positions by the end of the day) and scalping (taking extremely short-term positions which can last seconds).

Traders will mainly be using 5-minute or 15-minute charts, or even shorter timeframes, so this means that they will need to check their computer screens every few minutes, or stare at it constantly. This can be quite stressful for beginners, hence it is strongly not recommended.

The products traded will tend to be very liquid, have low commissions, and have significant price movements during the course of a day. These include forex, futures, and larger stock markets.

Medium-term Trading

Medium-term trading is the most ideal for part-time traders, as it does not require much monitoring of the markets. It is also known as swing trading, as it captures the “swings” in the markets.

Traders will mainly be using the 4-hour or daily chart, so they will only need to check their charts every few hours or even once a day, making it ideal for people who have full-time jobs and do not want to spend too much time looking at charts.

The products traded will tend to be those more customised to retail traders, such as forex, CFDs, and stock markets that do not have too high transaction costs.

Long-term Trading

Long-term trading is suited for people who do not have any time at all, and this includes position traders and investors who take long-term positions that can last weeks or months.

Traders will mainly be using the daily chart or weekly chart, meaning they will probably only be checking up on their positions weekly, monthly, or even quarterly. This is the most hands-off option, but it also requires a lot of patience, and is not suitable for people with little capital since your capital is going to get locked up for long periods of time.

The products traded will tend to be more asset-based, such as stocks, ETFs, REITs, or other assets which can appreciate over time and pay dividends.

If you would like to learn how to get started in trading, also check out: “The Beginner’s Guide to Trading & Technical Analysis”

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Spencer Li

Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media.