Trading has been a hot topic for some time now, and for good reason. At the end of the day, it’s a great way to make money if done properly. However, if you plan on getting started in the world of trading, it’s going to be important for you to learn about trading strategies, picking the right strategy for you, and employing that strategy for a profit. Today, we’ll talk about how to choose a trading strategy based on your lifestyle.
Starting With The Basics
When it comes to trading strategies, the first thing that you need to learn is that all strategies fit into one of two basic buckets. Either they are fundamental strategies or technical strategies. Here’s an idea of how those work.
- Fundamental Trading Strategies – Fundamental trading strategies are strategies that are based around fundamental analysis. Beginners tend to gravitate toward these types of strategies as they tend to be relatively simple to understand. Essentially, fundamental strategies revolve around following data like product releases, sales numbers, management changes, and more in order to make predictions with regard to where assets are headed. When trading, it’s important to keep in mind that fundamental strategies are best for making long term predictions.
- Technical Trading Strategies – While beginners tend to gravitate toward fundamental trading strategies, it’s important to keep technical strategies in mind as well. Technical strategies surround technical analysis, which is the analysis of technical data to make predictions with regard to where the values of assets are headed. Technical strategies include the use of charts and graphs are are successful based on the concept that in the market, history repeats itself. So, by studying movement that happened in the past, we can make relatively accurate predictions with regard to what’s going to happen in the future. It’s also important to remember that technical trading strategies tend to work best with short term trades.
Letting Your Lifestyle Decide What Type Of Strategy Is Best For You
Have you ever noticed that when you do things, you tend to be more effective when those things come naturally to you? The same works for trading. At first glance, you may think, “None of this is natural!” However, if you keep your lifestyle in mind when choosing your trading strategy, you’ll be surprised at just how easy the process becomes. Here’s a brief breakdown of the types of people that will generally be most successful with both fundamental and technical trading strategies.
- Fundamental Trading Strategies – If you’re a laid back, wait and see type of person, fundamental strategies will generally be best for you. Those who are most successful with these strategies are people who are less anxious, and don’t make knee jerk reactions to much. In general, fundamental traders are capable of putting excitement to the side and focusing on the long-term intrinsic value of the asset they are trading.
- Technical Traders – If you’re more of a fast paced person that’s willing to take risks, technical strategies will likely be best for you. By nature, technical strategies work best in short term trades. This makes the trading process fast and exciting for those looking for a thrill!
What Do You Think?
What type of trader are you, fundamental or technical? Join the discussion in the comments below!
[Photo Credit: stevepb]
Hi, my name is Jon and I run Penny Thots. I’ve been interested in personal finance since high school and love writing and talking about it. You can learn more about me in the Authors section of this site.