You need to hear this…
World-class traders tend to have two things in common…
First, they’ve mastered the basic fundamentals of trading. They understand the personality of the stock market, how to read and analyze charts, and the finer points of timing and execution…
But there’s something even more important, beyond the nitty-gritty details of trading, that the world’s best traders share…
SPOILER ALERT: They all have their own unique trading style.
By developing an individual style that fits your personality, account size, and risk tolerance … you can potentially carve out a niche that other traders aren’t exploiting.
In other words, by finding your style … you might just carve out an edge for yourself. And this is what every trader on the planet should be striving toward.
With that in mind, keep reading and I’ll show you how I found my trading style, other styles that may work for you, and how to potentially find your own…
My Trading Style (and How I Discovered It)
I’ve developed my trading style over 12 years of hard work, dedication, and self-discovery…
My style is a combination of momentum trading and technical trading with a short bias.
I focus on popular stocks that are trading on large volume with juicy volatility.
Then, I usually look to buy put options near the top of these momentum stocks, expecting to profit from the inevitable downside.
You may be wondering … why have I chosen this as my trading style?
First, it works for me. That may sound elementary, but it’s really that simple for a lot of traders. It’s always been easier for me to nail the downside than the upside. Don’t overcomplicate things.
But the real reason I focus on shorting momentum setups is the probability of success I’ve seen trading these plays over the years.
REMEMBER: What goes up … must come down!
When a stock gets overextended on hype and momentum, it’s not a matter of if the chart will crash back down to earth … only when.
That said, you might hate shorting momentum stocks. Every trader is different.
You’ve gotta analyze different trading styles to find what works for you…
5 Common Trading Styles (and How They Work)
Considering this, I’d like to lay out a few common trading styles.
Who knows, one of these styles may fit your personality perfectly…
Day traders execute trades within a single trading day, aiming to capitalize on short-term price fluctuations. They closely monitor price movements, utilize technical analysis tools, and even occasionally employ high-frequency trading strategies. Day traders typically close all their positions before the market closes to avoid overnight risks.
Swing traders aim to capture medium-term price movements that occur over a few days to several weeks. They analyze technical indicators, chart patterns, and market trends to identify potential mid-term entry and exit points. Swing trading involves holding positions for a longer duration compared to day trading, but shorter compared to long-term investing.
Position traders take a long-term approach, holding positions for weeks, months, or even years. They focus on identifying major trends in the market and aim to profit from sustained price movements. Position traders often rely on fundamental analysis and macroeconomic data to assess the overall health and prospects of a company or sector.
Momentum traders seek to profit from stocks that are exhibiting strong upward or downward momentum. They look for stocks with high trading volumes and rapid price movements. Momentum traders often utilize technical indicators, such as moving averages or relative strength index (RSI), to identify stocks that are gaining or losing momentum.
Contrarian traders take positions that go against prevailing market sentiment. They believe that the market often overreacts to news or events, leading to mispriced stocks. Contrarian traders may buy stocks when they are out of favor and sell when they are overly hyped. They rely on analysis, research, and their own judgment to identify opportunities that others may have overlooked.
It’s important to remember that these trading styles are not mutually exclusive, and many traders may combine elements from different styles to suit their preferences and market conditions (like myself).
Also, remember that no trading style works at all times. No setup lasts forever.
You have to continuously adapt your strategy and style based on your experience and the ever-changing dynamics of the stock market.
One of the coolest things about trading is the variety of styles available to traders.
Start researching the styles I’ve laid out today and think about what aspects of each you might employ in your trading.
Bottom Line: There’s a trading style out there for everyone, you just have to find yours…