Four Steps to Understanding Your Trading Style: Framework, Strategy, Analysis and Risk Level!

The way a trader trades is an important but often overlooked factor. To be successful, it is important to first understand your own style.

The so-called trading style is to focus on learning trading strategies and how to find out the methods that are most helpful to you.

Learning to trade is not easy, so stop making trading more painful by not finding the right strategy. In short, if you have mastered at least one trading strategy, it will not be too difficult to learn other knowledge, because you know the whole process and mentality, and you know what is best for you.

Decomposing the transaction method, we can see that there are mainly four cores, and each core can be further divided into three levels.

Trading Style Breakdown

Trading Time Cycle

What types of transactions did you make? One of the reasons many traders lose money is that their timing is inconsistent with their own trading style, but this is rarely noticed. These traders were trained and advised by other traders, but no one understood themselves and how to trade.

Whether you are intraday trading or swing trading, understand your trading style and find the most suitable strategy, so no matter which trading time period chart you use, you can be profitable.

Any chart has advantages and disadvantages. For example, I am a swing trader. Since there are fewer trading signals on longer-period charts, I can choose a few more currency pairs to trade. Any transaction can expand more opportunities on the basis of understanding yourself:

1. Long-term trading: lasting for weeks or even years

2. Swing trading: lasting for several days or weeks

3. Intraday trading: from seconds to hours

So the most important thing is to find the trading cycle that suits you. In the meantime, consider how you hope that success in trading will change your life. If you are just supplementing your income and enjoy trading, try day trading. If your goals are big, maybe give it a try. Try volatility or long-term trading.

You don't need to pay too much attention to how other traders trade and how much they make, you'd better focus on yourself.

Trading straregy

Second, you have to consider what strategy to use. Are you interested in fundamental analysis or technical analysis?

Most people probably use both, but there's always a more important strategy. It is not excluded that a few people use both equalizations, or rely on only one method of analysis. Therefore, it is necessary to study how to choose the corresponding trading strategy.

graphic type

The next step is the chart type. This chart is mainly based on trends and is divided into two categories:

1. Counter-trend charts: you look for price changes in the chart

2. Trend chart: You have to trade with the trend

Many strategies don't fall into one specific chart type, so you can separate them out and decide how they work for you according to your own style. The following are examples of different categories:

risk level

Risk is a straightforward topic, in simple terms, I would personally analyze it as follows

1. Low risk: less than 1% per transaction

2. Medium risk: the risk is 1%-2%

3. High risk: higher than 2%

But I still recommend that most traders at least start trading with less risk. If you keep proving that you are capable of taking high-risk trades, then readjust.

In short, do what works best for you.

What's next?

Considering your own trading style should start at the beginning of the transaction, but the idea must be correct, sometimes the way we want is not really useful to us.

For example, a trader thinks that day trading is exciting and exciting, and wants to do day trading, but the reality is that he has a lot of work pressure and has two children, so swing trading may be more suitable for him.

If you don't know what method is suitable for you, you can open a demo account first and try various time charts, strategies, etc. Anyway, the demo account has nothing to do with whether it is profitable, you can use it for testing. Remember your goal is to find the strategy that feels most comfortable to you.

Take a month to do this and you'll find the process worth it.