Your Trading Style and Holding Period ⌛️ ⌛️ ⌛️
Updated: Oct 16
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.
1️⃣ Scalper 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.
Above, you can see the examples of short-term scalping trades,
that were taken on a 15m time frame on Gold.
2️⃣ Intraday 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.
Above, EURUSD on an hourly time frame.
The trades were opened and closed within one single trading day.
3️⃣ Swing 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.
GBPUSD - 4H time frame. There, you can see the examples of swing trades that had a holding period of several days.
4️⃣ In 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.
Long position on a daily time frame on Bitcoin on a chart above is a perfect example of a longer-term position - the investment.
Recognizing an average holding period is crucially important for a selection of your trading style.
Which one do you prefer?