Types of Traders and Trading Styles: How to Identify Your Investment Personality
•By Mahersaham Team
Artikel ini juga tersedia dalam Bahasa Melayu
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In the world of trading — whether stocks, futures, crypto, ETFs, or indices — every person has a different style and approach.
Some enjoy monitoring charts every minute, while others are more relaxed and only check the market once a week. Understanding the types of traders is crucial because it helps you identify the style that best suits your time, emotions, and capital.
In this article, we list the trading styles you need to know before taking your first steps in the world of investing.
A day trader is a type of trader who enters and exits all positions within the same day.
They will not hold any overnight positions, as their primary target is quick daily price movements.
This group works very fast, analysing price movements in real time (live) and is willing to take high risks to secure profits within a short period.
Although it is attractive for those who want immediate results, this style requires full focus, mental stamina, and strong discipline.
Some traders choose to become scalpers — the fastest trading style in the market.
Scalpers capitalise on very small price movements within a matter of seconds or minutes.
They enter and exit the market multiple times a day to accumulate micro profits.
Although it may seem easy, this style requires precision, experience, and the ability to make instant decisions.
It can be extremely exhausting for those who are not accustomed to fast-paced pressure.
For beginners who work full-time or cannot monitor the market every minute, swing trading is often considered the most suitable style.
Swing traders hold positions for several days to several weeks, depending on the momentum and medium-term trends in the market.
This style is more relaxed, does not require continuous monitoring, and is easier to manage for anyone with other commitments such as office work or their own business.
However, it still requires awareness of changes in market sentiment, as prices can change suddenly when you are not monitoring.
Unlike swing traders, position traders focus on the bigger picture and long-term timeframes.
They hold positions for months or even years, depending on the fundamental performance of the asset and the overall market trend direction.
This style is far calmer compared to day trading or scalping, as small fluctuations do not significantly affect their decisions.
Nevertheless, long-term positions require larger capital and high levels of patience, as profits do not come immediately.
Breakout traders wait for the moment when prices break through important levels such as resistance or support before entering the market.
They believe that when a price successfully "breaks out" and exits a certain zone, the momentum is usually strong and can deliver significant profits.
However, this tactic does not always succeed, and sometimes "fake breakouts" occur, causing prices to fall back after the trader has entered.
Therefore, this style requires good discipline and the strict use of stop-losses.
There are also reversal traders — a type of trader who attempts to catch a change in price direction before it happens.
They look for signs that a price has become overbought or oversold and may be about to reverse direction. If successful, reversal trading can yield very large returns because the trader enters at the most optimum price. However, this style is very risky because going against the market current requires precise timing and highly skilled analysis.
Meanwhile, momentum or trend traders are traders who do not go against the current. They only follow price movements when the trend is already clear.
This style is considered more stable and suitable for beginners, as they simply follow the market direction and do not try to guess reversal points.
Lastly, there are traders who focus on more complex instruments such as derivatives, futures, options, forex (non-Shariah), and also automated trading using algorithms.
This style is more technical and requires a deep understanding of financial products and leverage risk. It is usually only suitable for experienced traders who are willing to invest time in learning more advanced technical aspects.
Overall, every type of trader has its own advantages and disadvantages. No single style is the "most correct" because everything depends on your personality, time, emotions, capital, and experience.
Most importantly, before choosing any style, ensure you have discipline, foundational knowledge, and solid risk management — because these are the three things that determine whether you become a successful trader or not.
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The main types include Day Trader, Swing Trader, Position Trader, Trend Trader, Breakout Trader, and Scalper. Each style differs in terms of holding period, time required, and level of risk.
Swing Trading or Trend Trading is most suitable for those who work full-time as it does not require continuous market monitoring throughout the day.
Day trading requires quick analysis, high emotional resilience, and sufficient capital. Beginner investors are advised to start with swing trading or position trading first before attempting day trading.
The three key factors that determine a trader''s success are discipline, foundational investment knowledge, and solid risk management — regardless of the trading style chosen.
Once you have identified your trading style, the next step is to open an account and start practising with real capital.
Open your CDS account through Register CDS Account with Mplus and start practising your chosen trading strategy on Bursa Malaysia.
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