What determines a trading style?
Choosing the right trading style is a fundamental step for anyone who wants to become active in the forex and crypto markets. A trading style is largely determined by the chosen timeframe. The timeframe defines not only how long a position is held, but also affects the time required, the type of decision-making and the relevance of different analytical methods.
In the FinScans system, we distinguish four main trading styles, each linked to two specific timeframes. This enables a structured analysis and clear assignment of signals and trends.
How does the timeframe influence trading?
Short timeframes, such as those used in scalping (15m and 30m chart) or day trading (1h and 2h chart), are characterized by a high frequency of price movements. In our system, short timeframes generate significantly more signals than long ones. In the short horizon (15m to 2h), the overall assessment in the Cockpit weights almost exclusively the technicals.
Medium-term approaches like swing trading (4h and 8h chart) have a lower signal frequency. In the medium horizon, the overall assessment continues to predominantly weight the technicals. Long-term strategies like position trading (12h and 1d chart) generate the fewest signals; in the long horizon, the overall assessment predominantly weights the news situation. The exact weighting is explained in the Methodology for Horizons.
Signals exist in all four styles, but only for forex and crypto pairs.
Which four trading styles are there?
| Characteristic | Scalping | Day Trading | Swing Trading | Position Trading |
|---|---|---|---|---|
| FinScans Timeframes | 15m / 30m | 1h / 2h | 4h / 8h | 12h / 1d |
| Typical Holding Period | Minutes to hours | A few hours until the end of the day | Days to a few weeks | Weeks to months |
| Time Commitment | Very high, continuous monitoring | High, regular checking | Medium, daily checks | Low, weekly review |
| Signal Frequency | Very high | High | Moderate | Low |
| Weighting in the Cockpit (Technicals/News) | 90/10 | 90/10 | 60/40 | 30/70 |
| Main Costs | Spreads, commissions | Spreads, commissions | Overnight financing (swaps) | Overnight financing (swaps) |
| Overnight/Weekend Risk | Very low (mostly no open positions) | Low (positions are often closed) | High | Very high |
What do the Cockpit and signal page show regarding the styles?
The FinScans Cockpit shows the trend on all eight timeframes from 15m to 1d. In the Cockpits of the forex and crypto pairs, there is a separate card for each style that summarizes the two associated timeframes. From 20 decided trades onwards, the card also shows the hit rate of the style.
On the detail page of a signal, you will find the trigger table, target and stop, as well as a style chip indicating the associated trading style. Additionally, the frequency of the signal class is specified.
How do you choose the right style?
The decision for a trading style depends on several personal factors:
- Time budget: Do you have time to watch the market all day? Then day trading or scalping might be an option. If you only have time in the evening after work, swing or position trading are more suitable. The hybrid workflow applies to every style.
- Capital and costs: Frequent trading incurs higher transaction costs (spreads). With longer holding periods, however, swap fees are incurred.
- Temperament: Scalping requires quick reactions and stress resistance. Position trading requires patience and the ability to endure interim fluctuations.
A typical beginner mistake is trading without sufficient risk management or constantly changing styles without giving a method time. In addition, external factors such as major economic events listed in the economic calendar should be considered. How signals are generated and classified is explained in the Methodology.
Frequently asked questions
What is the most important factor when choosing a style?
The most important factor is the time you can reliably spend in front of the screen. Scalping and day trading demand attention during active trading hours. Swing trading manages with one to two hours in the evening, position trading with one look per day or a few per week. After that, temperament and costs count.
How much capital do I need?
There is no fixed amount. What matters is that you only risk a small portion of the account per trade, depending on the style about 0.25% to 2%. Leverage only lowers the deposited margin, not the risk. Start with a demo account before risking real money.
Can I mix different trading styles?
While it is possible to mix different styles, beginners should focus on mastering one style first. Mixing styles often leads to confusion, as a setup that looks bullish for a long-term position trade can look extremely bearish on a short-term scalping chart.
Are there signals for every style?
Yes. Every signal carries a style chip on the signal page showing which of the four styles it belongs to. However, signals are only available for forex and crypto pairs. The hit rate of a style appears on the style card in the Cockpit as soon as 20 trades are decided.
Sources
- Kathy Lien, "Day Trading and Swing Trading the Currency Market"
- John J. Murphy, "Technical Analysis of the Financial Markets"