Analysis Types
Trading Styles
Active trading is the act of buying and selling securities based on short-term movements to profit from the price movements on a short-term stock chart
The mentality associated with an active trading strategy differs from the long-term's buy-and-hold strategy found among passive or indexed investors.
Active traders believe that short-term movements and capturing the market trend are where the profits are made.
Your trading style could be:
Short Term Trading (Also referred to as Day Trading)
Scalping
- Lasts for a few seconds
- Profit target is around 5-10 pips
- Benefit from a small reversal in market
- Dependence on technical analysis is maximum (100%)
Momentum
- Lasts for a few minutes
- Profit target is around 20 - 50 pips
- Benefit from a major reversal in market/news
- Dependence on TA is 610%, FA 40%
Medium Term Trading
Swing Trading
- Lasts from 1 day to around 3 weeks
- Profit target is around 100 - 150 pips
- Benefit from major moves in the market
- Dependence on technical analysis is minimal (up to 20%)
- Fundamental analysis constitutes 80% of decision making
Long Term Trading
Position Trading
- Lasts more than a month
- Can last for as long as two years
- Profit target is big, over 500 to 600 pips
- Dependence on technical analysis is minimal (up to 20%)