Trading styles: Which one best fits your investor profile?

Still not sure which trading style is yours? Here we break down the four main approaches dominating the market and help you identify which one suits your personal situation.

▶ The four trading styles you need to know

There are four fundamental approaches: Scalping, Day Trading, Swing Trading, and Position Trading. Each is distinguished by its time horizon, operational intensity, and risk profile. Let’s look in detail at what characterizes each one.

① Scalping: Operations in milliseconds

Duration: Seconds or minutes

This approach aims to capture small price fluctuations within very short time frames. The trader opens and closes positions repeatedly, taking advantage of micro differences between buy and sell prices.

Individual gains are modest, but constant repetition multiplies returns. In cryptocurrency, for example, price movement in a three-minute candle can represent changes of 0.66%, enough to profit if traded with precision.

Who can do it: Only professional traders with maximum concentration. Requires being glued to the screen, executing operations without breaks, and possessing advanced knowledge. If you have a full-time job, this style is probably not for you.

Risk: Very high. Especially if you apply aggressive leverage, losses can be catastrophic. It is recommended to always use stop-loss orders.

② Day Trading: Buy and sell within the same day

Duration: Less than 24 hours, without holding overnight positions

Unlike scalping, here trades can last several hours within the trading day. The trader closes everything before the market closes, avoiding overnight risks.

This methodology exploits intraday volatility. Works well with highly liquid instruments: currency pairs, cryptocurrencies, CFDs. Higher volatility provides broad profit opportunities, and superior liquidity facilitates quick exits when prices rise.

Who can do it: Full-time traders or dedicated traders. You need availability during market hours and instant reaction capacity. If you work 8 hours, this method is also not feasible.

Risk: Elevated. It is advisable to set stop-loss orders for each position.

③ Swing Trading: Days or weeks of holding

Duration: From days to several weeks

Here, the trader benefits from broader trend movements. No need for constant monitoring or split-second decisions. The analysis predicts where the price will move over several cycles, and the position is held until the pattern completes.

For example, if an index rises for a few days and then retraces to repeat the cycle, the swing trader takes advantage of these predictable waves without long-term exposure.

Who can do it: Ideal for beginners and part-time traders. Does not require watching charts all day. It is perfectly compatible with a full-time job. Operational costs are significantly lower than scalping or day trading.

Risk: Moderate. Combining technical and fundamental analysis greatly reduces uncertainty.

④ Position Trading: Long-term investment

Duration: Months, years, or decades

The position trader is completely unaware of daily fluctuations. Opens a position when detecting long-term growth potential and holds until that potential materializes. If buying in a bear market, waits until the next bull run, without selling out of panic.

Real case: An investor bought Amazon shares on January 1, 2014, at $18.21. Using fundamental analysis, predicted sustained growth. After holding the position for 6 years, sold on January 1, 2021, at $159.03. Total profit: +140.82%. However, this result is not guaranteed; it depends on multiple uncontrollable factors.

Who can do it: Traders who dislike being glued to screens. Requires patience, deep analysis, and rational decisions during emotional volatility. Ideal if trading cannot be your main occupation.

Risk: Seemingly lower due to its long horizon, but concentrates risk in few positions. Predictions can fail.

▶ Quick comparison: Which is your style?

▶ How to choose your trading style

Before committing capital, evaluate these three factors:

1. Your available time

Do you have 8 hours with a job? Forget scalping and day trading. Swing trading and position trading are compatible with work responsibilities. Position trading hardly interferes with your daily life.

2. The type of instrument you want to trade

A currency pair like NZD/USD fluctuates constantly and lacks a clear trend. Swing trading works better here. Amazon stocks show sustained upward trend for years. Position trading is superior for this asset.

Adapt your strategy to market behavior, not the other way around.

3. Your level in technical and fundamental analysis

Do you know candlestick patterns, supports, and resistances? You master technical analysis. Can you evaluate financial statements and industry prospects? You have fundamental analysis. The most profitable traders use both simultaneously.

▶ Risk warning

Trading styles based on frequent operations — especially scalping and day trading — carry extreme risk. Their combination of constant repetitions, cumulative spreads, and volatility generates exponential losses for inexperienced traders.

If you are a beginner, avoid these two methods initially. First learn with swing trading. Use stop-loss orders in each trade. Remember that no style guarantees permanent profits; markets change and your strategies must evolve.