Discover your trading style on eToro

Your trading style is a critical aspect of your journey on the eToro platform, as it dictates your approach to buying and selling assets. Trading style is influenced by factors such as investment objectives, available capital, time commitment, risk tolerance, and desired returns. To help you find your ideal trading style on eToro, we’ve compiled this comprehensive guide, filled with tips and information on popular styles and methods. Let’s dive in!

How to Choose Your Trading Style

To select the most suitable trading style for you, it’s essential to answer the following questions:

1. What is your investment horizon? ⏳

Do you prefer long-term investments or short-term trading opportunities, such as day trading? Long-term investments require patience and a willingness to tie up capital for extended periods, while short-term trading demands time, research, monitoring, and higher risk-taking.

2. What type of assets will you trade? 📈

The volatility and liquidity of assets you are trading may also indicate the style best suited to profit off these assets. Highly volatile liquid assets tend to be more suitable for short-term trading and can provide a return for those who know how to trade them, while less risky assets may be more suitable for long-term. At the end however, it boils down to the way in which you want to profit off these various securities.

• Stocks: stock prices are influenced by quite many factors, both company specific and the ones resulting from various surrounding economic conditions. Depending on your own preferences and choice of stocks they can be used for both day trading and long term investments.
• Cryptocurrencies and cryptoassets : the popularity of cryptoassets keeps increasing despite their relative volatility and risks, but they remain quite a controversial market. Their return and suitability for long-term investments largely depend on how widely they are used; bitcoin for example, is one of the oldest cryptoassets and is seen as a long-term investment by many, while newer assets are more volatile and quite risky for that purpose.
• Commodities: some commodities like gold are suited for long-term investments, while other more volatile and very liquid ones like crude oil tend to undergo many price changes in a day; at the end, the choice boils down to your personal purpose of trading them.
• Currencies: Currencies market is the biggest traded financial market in the world in terms of volume. Currency pairs are quite suitable for day trading as they are relatively volatile and liquid.
• Indices and ETFs: Exchange traded funds are instruments made up of several assets blended together and traded on the market like a single asset just like any stock. These funds usually adhere to a specific market strategy or track an index. Usually index funds are used for longer term investments as the funds they track are passively managed; ETF’s are used for both short-term trading because of their liquidity but they can also be held over a long time period.

Common Trading Styles Explained 📚

Based on the duration of open positions and the speed of profit-taking, here are the most common trading styles:

1. Day Trading

Day trading, also known as intraday trading, involves buying and selling assets within a single day. Liquid stocks and currencies are popular choices for day trading, but it can be done in any market. Day trading strategies include scalping, news trading, high-frequency trading, and range trading. This style can be risky and may result in substantial losses for traders without adequate market knowledge and analytical skills.

2. Scalping ⚡️ (Note: Scalping is not allowed on the eToro platform!)

Scalping traders sucess from small price movements in numerous trades rather than focusing on a few large single trades. This fast-paced, short-term style capitalizes on price misalignments generated by bid-ask spreads and order flows. Scalping requires discipline, as traders must close their positions after achieving desired success or reaching maximum loss levels. It also demands expertise in leverage, stop-loss, and entry/exit points.

3. Swing Trading 🏌️‍♂️

Swing traders aim to make success from an asset’s volatility at the end of a price trend, focusing on short to medium-term returns. Positions in swing trading typically last from a few days to several weeks. Traders employ a combination of technical and fundamental analysis to identify potential future price movements and capitalize on anticipated upswings or downswings. This style is known for its flexibility and adaptability to market conditions.

4. Long-term Investing 📅

Long-term investing, or position trading, revolves around holding assets for an extended period, sometimes for years, with the aim of following a trend. Position traders are not concerned with short-term market fluctuations and instead focus on an asset’s long-term performance. This style often relies on fundamental analysis, but technical analysis can be employed to identify trends. Long-term investing requires patience, acceptance of low liquidity, and a willingness to tie up assets for a specific duration.

5. Copy Trading 🔄

If you’re struggling to find a suitable trading style or strategy, consider copying a professional trader to generate returns. Copy trading saves time and effort by allowing you to follow a skilled trader’s activities. You can choose a trader whose style, asset preferences, and investment horizon align with your goals from a wide selection available on the platform.

Now that you have a clearer understanding of various trading styles, you can confidently choose the one that best suits your preferences and objectives. Remember, patience is key in the world of trading, and your ability to adapt and learn will go a long way in ensuring your success. Good luck! 🍀

---

Support us by using the eToro sign-up form down below.⬇️

Plus you will get a Free demo account! Thank you!

GENERAL RISK WARNING

• ▸eToro is a multi-asset platform that offers: Stocks, Crypto assets, and CFDs.
• ▸CFDs are complicated and can make you lose money quickly because of leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. Think about if you understand how CFDs work and if you can afford to take the risk of losing your money.
• ▸Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
• ▸Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
• ▸Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
• ▸eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity-specific information about eToro.

Be warned!

---

Author & Expert Trader - Financial Analyst :

My name is Bart Bregman and I am a full-time professional trader with nine years of experience. I specialize in shorter-term trading using technical analysis, and I have extensive experience with Stocks, CFDs, Options, and Crypto trading. I believe that there is no such thing as a bad trade. I'm currently traveling the world as a digital nomad trader. You can follow my journey on Instagram at https://www.instagram.com/bart_bregman/