Focus On: Trading Style and Trading Philosophy Part 2

Swing trading:
I found out that this is an approach I personally like because if executed right, you don't have to take that many losses. Additionally, the time frame we are looking at is probably a bit shorter, starting from half a day until 1 or 2 weeks, maximum. This trading style works best in ranging markets, but can be applied to trending markets as well (on shorter time frames). For those of you who do not know what swing trading is, here is a short definition
I will go into more detail with swing trading in a following article. The advantage of swing trading is that you do need to have perfect entries (which is very difficult to have!) but you can build your position in a target area. Of course, strict money management also applies here, like with every strategy (I think I will make an article on this as well). A disadvantage can be that your stops cannot be too tight, so you should have a big enough trading balance, or trade with small lot sizes! Some instruments which could help with swing trading are support and resistance levels and indicators like RSI.
Scalp trading:
Scalp trading is the trading approach with the shortest time frame (seconds to minutes). It tries to use small changes in price to make just a few pips profit. It is one of the most discussed and controversial strategies I encountered in my trading career! But I will go into that later on. First let us think about the philosophy behind this. This trading style should best fit people, which love action, that are often at the computer and that cannot hold onto long positions they made. It is important, in fact very essential, that they have a good strategy which they follow very strictly. Thus often scalping strategies use a mechanical trading system where you strictly follow one or more indicators. It is important because you need to have a high win rate! Why? Because your winners and losers are likely to be of the same size (a few pips) and because you are constantly paying the spread! This is disregarded by some people, but should not be underestimated! In addition, it is even more important to have a very good money management here. You cannot hold long onto your losers and close your winners at a few pips. It is not possible to be profitable with that strategy in the very long run. Although I throw these words of caution at you, scalp trading can definitely be profitable, and I know guys which are constantly posting profits with such strategies.
My point is (and I hope you already began to see it) that the trading style must fit your own style/philosophy. You must feel good with what you do, you must enjoy. it Only then you will be a good trader in the long run!