You should have a considerable amount of capital in disposal with a predefined risk/reward ratio. It is recommended to keep the trade size reasonably low.
A day trader should keep both eyes in fundamental analysis and technical stuff as well. Only the combination of both analyses would bring a good result.
A successful day trader must come up with a new strategy almost every other day, or at least adopt their current strategy to the new market conditions.
Success without discipline cannot be achieved. It is very important you to monitor prices for wide periods of time without making any decisions.
Position trader stands for somebody who holds an opened position for a certain period of time, during which they expect that it will appreciate as an asset. The time frame a position trader keeps his positions opened go from weeks to months. They are not focused on short-time movements or daily news which might affect the prices. Position traders do not trade actively, with most placing less than 10 trades a year.
Position traders follow the trends. They believe that if a certain trend starts, it will continue. So, they keep their positions opened for long. Only long-term investors, who are called as passive investors, hold their positions for longer than do position traders.
Position trader’s philosophy is moved towards successfully identifying the trends which would lead in an appreciation of their investment capital. It is the opposite of day traders. They seek to take advantage of short-term market movements.
Position traders usually choose one of the trading analyses, sometimes they combine both when it comes to decide. They also take in consideration macroeconomic factors, general market trends and historical patterns to select investments which they believe will achieve their desired outcome. A position trader should decide since the beginning protective mechanisms, like stop-loss levels.
Swing trading is that style of keeping positions opened and catching movements in a stock or any financial instruments during few days to several weeks. Their first “gun” to reach to the necessary information is technical analysis. They check for opportunities through graphs. They may use fundamental analysis in addition to analyze price trends and patterns.
The goal of swing trading is to capture a potential price move. Some traders go after volatile markets with sharp movements, others prefer safe stocks. In either case, swing trading is the process of identifying where an asset’s price is likely to move next, entering a position, and then capturing a chunk of the profit from that move.
Forex scalping is referred to forex traders who buy or sell a currency pair and then hold it for a short period of time to make a profit. A scalper seems to open many positions and making the most of the small price movements which happen randomly during the day. It seems like the profit is low per trade, like 5 to 20 pips, but if you increase the position size, you will see magnificent results.
Scalpers usually keep positions opened for seconds to minutes and open and close multiple positions through a single day.
Forex Scalpers usually uses leverage, which multiply their power in the market allowing them to open larger sized positions, so a small change in price equals to a considerable profit. For example, a five-pip profit in the EUR/USD on a $10,000 position (mini lot) is $5, while on a $100,000 position (standard lot) that five pip movement equates to $50.
Scalping is mostly used after crucial financial data are released such as the U.S. employment report and interest rate announcements. This happens because these data bring immediate impact on price fluctuations in short period of time. Due to the increased volatility, position sizes may be scaled down to reduce risk. While a trader may attempt to usually make 10 pips on a trade, in the aftermath of a major news announcement they may be able to capture 20 pips or more, for example.