Considering the various types of trading strategies, including position trading, day trading, swing trading, and scalping, one of the main challenges beginners face is determining which method can be profitable given their financial and work conditions.
💡In this guide, we’ll explore different types of trading, key factors to consider when choosing a strategy, and the best options for beginners to start trading.
How Many Types of Trading Are There?
In financial markets, people invest for various reasons. Some prefer long-term investments due to lack of time, holding their money for an extended period.
However, others like to make quicker trades using specific strategies to earn profits in a shorter time frame. Each choice has its own characteristics and risks.
Here, we’ll discuss some of the most common short-term and mid-term trading methods:
- Position Trading: In this style, traders buy a stock or cryptocurrency and hold it for several months. These traders focus more on strong trends and long-term patterns.
- Swing Trading: Swing traders hold their chosen stock or cryptocurrency for a few days to a few weeks, aiming to profit from a segment of the primary trend.
- Day Trading: Day traders buy and sell their selected stocks or currencies when the market opens in the morning and close all trading positions by the end of the market day. The goal is to profit within a single day, often based on news and market sentiment.
For more in-depth information, you can read the article on the Differences Between Day Trading and Swing Trading.
- Scalping: Scalpers typically use margin and leverage to take advantage of the smallest price changes in the market. These traders open and close positions within minutes.
Each of these strategies requires different levels of knowledge, risk tolerance, and time commitment. Understanding your own situation and preferences will help you choose the best approach to start your trading journey.
Which Trading is Best for Beginners?
Choosing the right type of trading should be based on the trader’s conditions (initial capital, knowledge and experience, lifestyle) and ultimately decided on which one suits you best.
This is because the choice of trading type determines the type of market, platform, and many management for trading.
We assume that you have mastered the knowledge of trading in financial markets. Next, by analyzing each type of trade, you will get closer to making the right decisions:
Position Trading
Position trading, with its long-term nature, allows you to analyze slowly and carefully. This method can be suitable for newcomers, as it lets them make decisions with peace and precision.
Depending on price changes and market conditions, they can adjust their trading strategy using technical and fundamental analysis.
However, position trading requires more capital, and based on this capital, the risks and returns are higher.
Swing Trading
Swing trading can be a suitable option for beginners who do not have a lot of experience. This strategy is medium-term, usually lasting from a few days to a few weeks.
In swing trading, constant market monitoring is less necessary, allowing beginners to manage their trades by analyzing the market over a few days and planning their trades.
The risk per position in this strategy is typically between 3 to 4 percent.
Day Trading
Day trading is not considered a suitable starting point for beginners in the world of trading and requires at least 1 to 2 years of activity in financial markets.
In day trading, trades are conducted between half an hour to two hours. Traders open and close their positions within the same day and do not hold positions overnight.
One of the challenges of day trading is that it requires keeping up with the news and mastering technical analysis, which might be difficult for beginner traders to handle all this information at the start of their journey.
The risk per position in this strategy is typically between 2 to 3 percent.
Scalping
Scalping is also a challenging trading strategy for beginners and is not recommended. Scalping is a very short-term strategy with high trading frequency, requiring patience, experience, and excellent market awareness.
In this strategy, trades are made in very short time frames (usually between 1 to 5 minutes), and the trader must react to the market situation with high speed and precise technical analysis, adhering to their trading strategy.
| Trading Method | Time Required | Risk Level | Suitable for Beginners? |
|---|---|---|---|
| Position Trading | Long-term (months) | High | Yes |
| Swing Trading | Medium-term (days to weeks) | Medium (3-4%) | Yes |
| Day Trading | Short-term (30 min to 2 hours) | Medium (2-3%) | No |
| Scalping | Very short-term (1-5 minutes) | High | No |
Conclusion
To start trading in financial markets in the short and medium term, it is recommended that beginners continue their trading journey with strategies that allow more time to analyze the market and make decisions, such as swing trading. This way, you can gain enough experience. After gaining experience in this strategy, which requires at least one year of consistent activity in financial markets, you can continue your journey with day trading and then gradually move to shorter-term methods like scalping if you wish. Scalping for beginners early on might be challenging due to its complexities and high risks, as short-term movements require a lot of experience in technical analysis and quick decision-making.
Have you ever had any experience with trading? Share your thoughts and experiences with us in the comments 💬 and if you find our content helpful, share this article with others. 🌐👥
FAQ
Which trading is Best for beginners: Day Trading or Swing Trading?
The choice between day trading and swing trading depends on experience, patience, and personal investment goals. Beginners usually start with swing trading, which provides the opportunity to better understand the market.
What factors influence the choice of trading?
Experience, time, patience, market analysis, and investment goals are among the most important factors in choosing trading.
What are the differences between day trading and swing trading?
The main difference lies in the time of the trades and the duration of holding positions. Day trading is usually done within a day, while swing trading may take several days or even weeks.