Different Styles of Day Trading That Are Common

Trading in forex, stocks, commodities, and cryptocurrencies is on the rise than ever before.

This is because more and more people are inclined towards these ways by which they can make some extra income every month.

In the world of day trading, each person can use a different trading style so as to achieve maximum profits once they are comfortable with it.

Styles of Day Trading

Day Trading

What trading style should be used depends entirely on the personality of the trader, though some professionals prefer using multiple trading styles each time, depending on the situation.

A brief rundown of each of the trading styles, as well as their advantages and disadvantages, can be found below.

Breakouts – Breakout trading involves spotting the pivot point (the average value of the high, low, and closing prices from the previous trading day) of the stock being traded, and then buying or selling within those pivot points.

For beginners, this is the commonly used strategy for them, meaning many day traders have already used this style before.

The advantages of breakout trading are that it has the potential for quick rewards, and are very easy to determine.

The disadvantage is that breakout trading can become very challenging, when the breakout fails and they can’t follow through, you’re in for a losing trade.

Overall, while suitable for beginners, breakout trading requires quick reflexes and decision-making to be able to succeed.

Counter Trading – Counter trading is, just like its name says when the trader opts to trade in the opposite direction to what the market dictates them.

They are quite similar to breakout traders in that they also look on the pivot point, but work differently on the opposite end.

According to a reliable trading platform DMX Markets, the advantages of counter trading are that it delivers a very high success rate due to the overall volatile and unpredictable nature of the stock market.

This can also be called a disadvantage, as when the pivot point does stay in its current trend, you may find yourself at the losing end of the trade.

Also, setting a fixed price action target can also be quite difficult.

Besides these two there are many other styles of day trading that can be followed. It’s important that you choose the right strategies and a broker that you can trust so that you do not face any big losses.

Filed in: Forex & Stocks

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