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How to Know Your Trading Style | Beginner’s Guide to the Stock Market | Module 21

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How to Know Your Trading Style | Beginner’s Guide to the Stock Market | Module 21

In today’s article, we are going to find out the most suitable trading style for you. When you start trading, there are many trading styles available for you that you can opt for.

There are various trading styles like Swing Trading, Intraday Trading, Positional Trading, Scalping, etc. Each of these requires a different mindset to trade, and you can’t trade them all with the same set of rules and the same mindset, although; your Risk Management principles will more or less remain the same.

Here are a few points, by considering them you can choose which one is the most suitable trading style for you.

1. Your Trading Style must be Aligned with Your Trading Psychology

This is probably one of the most important factors to consider while selecting your trading style. Every trading instrument requires different Trading Psychology.

For example, if you are an Option Buyer, then as per the probability perspective, your chances of winning is only 33.33%. So, in that case, you will lose money most of the time, but you have to win big in order to become profitable when you win. Generally, human minds are habituated to win, and winning makes us happy. Still, here as an Option Buyer, you have to do the exact opposite of it, so if you are comfortable with it, then Option Buying might be the most suitable trading style for you.

On the other hand, Option Selling requires a totally different mindset. As an Option Seller, your probability of winning is 66.66%, so here you will win most of the time, and that is why your win rate must be higher, but as an Option Seller, your edge comes from how quickly you cut your losses when a trade goes against you because as an Option Seller, you have unlimited risk exposure when if you don’t use a system stoploss and you can’t afford to sit in a bleeding position for too long. So, if you are comfortable with these rules, you can consider Option Selling as your suitable trading style.

Similarly, other trading styles require different trading psychology; an important point here is that your psychology should be aligned with your trading style to trade effectively in the market.

2. Taking into Account Your Screen Time

As different trading styles can be traded with different rules. Similarly, there are different screen time requirements according to your trading style.

If you want to become an Intraday Trader, you obviously have to be in front of your screen the whole day or for 2 to 3 hours to trade. On the other hand, Swing Trading does not require much screen time because, in swing trading, you take a trade for days, weeks, or months.

Also, if you are an Option Seller and you adjust your positions frequently according to market movement, you may have to sit the whole day in front of your screen observing market movement and adjusting your positions accordingly. In the case of option buying, you don’t particularly have to sit in front of the screen the whole day adjusting your position because here, you don’t have to adjust your positions as winning size is more important for you.

3. Trading Style Based on Your Patience

Everyone has different patience levels. Few people are more patient, whereas some are less patient. While selecting the right trading style, your patience matters the most.

For example, if you are less patient and you always want quick results, (profit or loss) in that case, Intraday Trading might be most suitable for you as in Intraday Trading, you will take profit or loss on that day itself. On the other hand, if you have more patience and you wait for the right setups to happen, and you can wait for weeks or even for months, then, in that case, positional trading might be most suitable for you.

These are the 3 Most Important Factors You Should Consider Before Choosing The Right Trading Style. Also, in order to find the best trading style for you, you have to trade every trading style and see which style suits you. In simpler words, you have to burn your hands first and know how exactly the game is being played. By just Paper Trading or by reading from other books, it is very difficult for you to find the best style for yourself. So my advice for every beginner trader is to trade and explore as many trading styles as possible and then decide which suits you the best.

I am sure that this article has helped in understanding how one can choose their trading style based on various important aspects. Also, don’t forget to share us across your social media platforms & tag us.

Have a good day.

7 Comments

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    1. Thank you, Prathamesh, glad that you find the blog helpful. We constantly try to bring helpful blogs for our traders and will continue doing so.

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