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What is your trading style ?

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Username: ehmu

Post Number: 176
Registered: 08-2010

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Tuesday, December 07, 2010 - 04:42 am:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)

Are you an technical investor, position trader, swing trader or day trader?

Taken from a free letter that I receive weekly---name witheld to protect the innocent.

"Your answer and your approach to the market will depend on many different things. How much time you have to devote to trading, your emotional make up, the state of the market and how quickly you can do analysis are all factors which should be considered when determining how you intend to trade.

Here is how the different trading types could be defined.

An investor's aim is to find 10 stocks per year. Once you have learned the correct Approach, you will need to spend 30 minutes a week doing the analysis and monitoring your stocks with the work typically done on the weekends. The investor should analyze weekly charts for the correct chart pattern set up.

A position trader is more active, perhaps able to find 10 trades per month. With more trading opportunities comes more time commitment, A position trader may spend 30 minutes a day 5 days a week. The focus of analysis is on daily charts.

A swing trader can trade 10 times per week by focusing on intraday charts on a 15 or 60 minute time frame. Ideally, the swing trader will spend an hour at the beginning of the trading day and an hour at the end to identify the good entry and exit points.

Finally, if you are a day trader you should be able to find, on average, 2 to 5 trades per day. To do so will require a substantial commitment of your time; it is essentially a full time job. 2 minute intraday charts are the best way to uncover the good trading set ups.

Here is what you may find surprising. No matter how you approach the market, the analysis method is essentially the same. Look for stocks that are trading abnormally out of predictive chart patterns. The only difference is the time frame of the chart we are considering. The investor looks at weekly charts, the position trader at dailies and the swing and day traders at intraday.

With any of the trading types, we must still practice good risk management, have a clear set of rules for entry and exit and always battle to control our emotions.

What method has the best potential to make money? The shorter the time frame that you trade, the more active you can have your money working. If you can make 1% on a stock in an hour and keep rolling the money over and over in to new trading opportunities a few times a day, you can really get some great returns in a year.

However, the shorter the time frame you trade, the harder it is to succeed. For most people, it is too challenging to be a great day trader, at least at first. Any aspiring trader should start with a longer time frame to learn and shorten the time frame as they gain skill and confidence.

So, you will make the most money trading the time frame that you are good at. It is easier to be an investor trading off of weekly charts because you have a lot more time to think about the trades you are considering. There is less emotion involved but of course, this ease requires patience. Your average hold period as an investor may be measured in years.

The trend of the overall market will have an impact on your trading performance. As the saying goes, a rising tide lifts all boats. When the market is trending, a longer time frame will benefit. In a choppy market, shorter term time frames have a better chance of success than longer because the moves will be shorter lived.

So, decide how much time you want to devote to the market and trade accordingly. If you love the market enough to want to be a day or swing trader, you should still start with position trading so that you can learn how to read charts, manage risk and keep your emotions in check."

_____ n a m a s t e

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