Which trading style should I choose? Many beginners who are interested in trading face this question. The question is really not easy to answer, because in addition to the usual trading strategies such as trend following, long or short term, etc., there are also product-specific strategies. Take binary options, for example: maturities are limited for binary options; this has a no less important influence on the trading style. The prospective customer therefore has to deal with whether the product is suitable for their preferred style.
But how do you find the right style? For this you have to test yourself, according to the motto "Learning by Doing". It is not for nothing that it is said that trading is mainly learned through experience. As a rule, many would like to start with day trading, which is one of the most difficult styles.
Only in the course of trading do many realize that day trading requires a great deal of time and market awareness, because day trading Trading with day trading software does not mean - as wrongly assumed - to make one or two trades a day, but in the meantime also to deal with planning.
Step by step to your own trading style
It is known among traders that you have to know yourself before you can act successfully in trading. Every trader is on a "self-discovery trip" during the course of his initial trading.
Therefore, beginners should make particularly small bets in this phase and increase them over time. The goal is to find out your own risk tolerance. At the beginning you usually take an increased risk because you do not know this tolerance and only have the profits in mind. With the first losses, the first doubts come up - these have to be overcome.
So the focus is on risk tolerance. This later determines the trading style, whereby risk tolerance can mean two things. Some perceive risk as fear of losing anything at all, while others have less of a problem with loss: it is the amount of loss that scares them.
Both cases lead to a different trading style. The first type of risk may focus on short-term trading, as it is reluctant to remain in loss positions for a long period of time. However, he does accept that his trading frequency is increased, which of course also affects costs and planning.
The second risk type is not afraid of a loss position, but is not very willing to make decisions and wants so little open new positions as possible. He may also be time-bound and cannot sit in front of the screen every day waiting for a chance. However, this risk type also accepts the risk that it will hold positions overnight while the exchanges may be closed.
The risk type determines the trading style
It is always again It's amazing to see how beginners are sure of their desired trading style. Mostly it is day trading. This often shows inexperience. If the trader has successfully passed the first phase of finding, he can set about building a sustainable strategy. Here the question arises, according to which criteria he wants to act: according to the technical, fundamental or possibly even the tossing method? All three have their justification.
To find out, the trader has to go on a self-discovery trip again. And risk tolerance also plays a role here. However, own capacities become more important in the analysis selection.
The technical analysis can be learned quickly and the application is quite simple. The emphasis is on "application", not trading as such. As is well known, analysis is only one factor in successful trading. Further, such as experience, market knowledge, monetary capacities and the knowledge of the correct application of risk and money management, are to be mentioned.
Here too it can happen that traders only recognize their preferences much later. Especially if you include fundamental factors in your trading. Fundamental knowledge requires a lot more time to use and therefore only comes into play after years of trading experience.
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Conclusion - an overview
You could talk forever about how to find your own trading style, Trading is a constant self-discovery trip - and it is not uncommon for traders to start with one style and end up with another. However, the desire of many beginners to practice day trading is more of a wishful thinking and unfortunately shows ignorance. Because every reasonably experienced trader knows that day trading is one of the most difficult styles.
With the broker IQ Option, beginners with low stakes can try to find out their style.