Your Trading Style and Holding Period ⌛️ ⌛️ ⌛️
Updated: Mar 5
How long to hold your trading position?
Everything depends on your trading style.
In this post we will discuss the preferable holding period for your trading positions.
Let's define 4 main trading styles:
Scalper, intraday trader, swing trader and investor.
One of the core differences between these styles is the time horizon of their predictions of a market behavior.
1️⃣Scalper attempts to predict minor price fluctuations. His goal is not to pursue the waves, rather a minor moves up and down.
For that reason, pro scalpers tend to hold their position minutes, sometimes even seconds.
Expanding the time horizon they are risking to be stopped out from their positions.
2️⃣Intraday traders operate on intraday time frames.
They are trying to predict the price movements within a day or even a trading session.
The average holding period of a pro intraday trader is ranging from minutes to hours.
3️⃣Swing traders are aiming to catch swing moves - the waves.
Typically by a wave we call a trend following movement.
Pro scalpers usually close their positions once the market starts retracing (correcting itself).
Following such a strategy, scalpers tend to hold their trades days to weeks.
4️⃣In contrast to a swing trader, the investor does not care about the retracements and pullbacks.
The investor is trying to pursue the entire movement within the trend.
Usually he hold his position till the trend lasts and closes that only when the market starts reversing.
Investors tend to hold their positions months, even years.
Recognizing an average holding period is crucially important for a selection of your trading style.
Which one do you prefer?