The key difference between short and long-term strategies

trading strategy

There are two basic types of trading strategies. The short-term trading strategies are followed by the scalpers whereas the long-term trading strategies are used by the conservative or position traders. Both systems have the potential to secure decent profit from this market. As a new trader, you might not understand the key difference between this two systems but the intermediate traders should understand it very well. But there is nothing to worry. We will highlight the key difference between short term and long term trading strategy. After reading this article you will be able to decide which system is the best for you.

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Short term trading strategy

Short term trading strategy is usually used by the aggressive traders. The traders use the lower time frame data and execute a trade with big lot size. They don’t ride the long-term market trend rather they book their profit within a very short period of time. This type of trading strategy is extremely risky and traders with years of experience should use this system.

Long-term trading strategy

Long-term trading is usually followed by the conservative traders. The traders use the daily and weekly time fame to execute quality trades. As a long-term trader, you will have to wait for a long period of time to form a single trade setup. Most importantly you will have to use a wide stop loss. So it’s very important you trade with small lot size and give your trade enough space to work. Being a long-term trader you will be able to secure your investment much more easily.

Choosing the broker

No matter which trading strategy you follow, you need to find open an online trading account with the reputed broker. Those who trade the market with the B grade broker will never have access to the premium trading environment. Being a short-term trader it will directly impact your trading performance. Most of the time you will be experiencing heavy slippage and your trades will not be closed at the right time. So be sure you chose a well-regulated broker who has a robust trading platform like SaxoTraderGo. Being a long-term trader you have some sort of flexibility and you can do well with the average class broker. But if you consider trading as your full-time profession, you should not compromise the quality of your trading environment.

Assessing your personality

By now you know the key difference between short and long-term trading strategy. But this doesn’t mean you will pick a random style and start to trade the market. You have to assess your personality to find the best trades in this market. You might have very little knowledge about this industry but this is very normal. Try to learn the basics by reading books and articles. Those who find it really hard should take help from the expert traders or enroll themselves in a professional course. Once you truly understand your personality, pick your desired trading strategy and demo trade the market for the first few months.

Learn from your mistakes

No matter which trading strategy you follow you will always have face losing trades. Mistakes are always appreciated as long as you learn from it. The novice traders often think this market is manipulated and it’s not possible to make a consistent profit. But getting into a conclusion after losing a few trades is the biggest mistake you can make as a trader. You have to learn the expert trader’s lifestyle. They even lose trade on regular basis. But due to their proper risk management policy, they are able to make a profit in the long run. They never trade this market with emotions or gut feelings as it dramatically increases the risk factors. Follow the proper rule of investment and trade the market with managed risk to become a successful trader.