Ask traders about their strategies, charting tools, and theories, and you’ll get different answers. That’s mostly because the practice of investing and trading is a highly personal activity. People adapt methods, mathematical formulas, approaches, and tools for their own unique goals.
For instance, swing traders operate on very different timelines than day traders do. That’s why the two are so unalike in the way they approach the markets. Swing trades require overnight holds, often last for as long as a week, and call for charting tools that don’t look anything like a day trader’s standard setup.
Buy and hold enthusiasts are long-term investors who often work with time horizons that reach decades into the future. On the other end of the spectrum, scalpers and forex practitioners rarely deal in long-term holding or analysis.
Besides, all these different types of profit-seekers prefer charting styles that match both their preferred timelines and the securities they buy and sell. Here are some of the charts and techniques used by today’s diverse groups of people within the securities markets.
Swing Traders
Swing traders routinely hold positions for several days and deal with as many as a dozen securities simultaneously. Most use longer-term charting times. However, the types of charts they rely upon vary widely. You’ll see swing traders switching between candlestick and bar charts regularly, while some like to keep things simple and view line charts exclusively.
Day Trading
Day traders use just about any kind of chart that suits their tastes, but the majority prefer candlesticks set to one-minute time frames so they can see even the slightest price changes.
Often, they combine one, three, and fifteen-minute charts to decipher unclear value movements in share prices. Short-term techniques for those who never hold a position open overnight include the use of moving averages, breakouts above and below support and resistance, and dozens more.
In general, day trading practitioners use the same types of analytical strategies that longer-term traders employ. The main difference is their use of minute-based charting. To get started, it’s helpful to review a day trading guide on the best penny stocks to work with. On dozens of online stock-related websites, you can easily view a list of stocks you can day trade in any economic climate.
Buy and Hold
Long-term investors, who regularly accumulate large numbers of shares from different corporations and hold them for years at a time, are categorized as BAH (buy and hold) devotees.
In most situations, they’re aiming to build retirement portfolios and gravitate to blue-chip shares. BAH enthusiasts prefer long time-frame line charts and study fundamental factors like earnings per share to select securities.
Forex Enthusiasts
People who deal with the 24/7, but closed on weekends, foreign exchange markets are a special breed. While their time horizons vary, they typically get in and out of positions rather quickly and are not known for staying in for the long term.
Perhaps that’s because currency rates change rapidly, and it’s essential for account holders to keep their eyes on the market almost constantly. Many forex users utilize line charts, especially when they’re first getting involved with forex. Others prefer to use candlestick charting after they’ve grown accustomed to price action in the currency markets.