What kind of trading is most profitable?

Just starting to learn about forex. I’m reading the school of pipsology now. But I want to know more about firsthand experiences for this question. What kind of trading is most profitable in your experience? Cheers!

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Any kind of trading that is profitable for you is good, any kind that is a loser is bad.

In one sense, there’s no need to research and study all the different types of trading, just find out the most common type of trading that is most widely used by the largest number of traders, that should be the easiest research ever.

Then make sure you do not do what they are doing - three-quarters of active traders today are losing money and will soon be replaced. Just don’t do what they are doing.

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Thanks for the very interesting response, tommor! I haven’t had the chance to look into what is most widely used by the largest number of traders, but what kind of trader are you? And what made you choose this kind of trading? Thanks in advance.

I have usually only traded long-term off D1 charts as I used to work full-time. This was at first swing trading, now trend-following only. At first I was swing trading UK FTSE100 stocks and the FTSE100 index, but recently trend-following forex and the Dow.

Ten years back and now again I have experimented with day-trading but this never works well for me over more than about a week. Still trialling this though and I will eventually find a profitable strategy.

Style is more important than a given strategy within that style as long as you have effective risk management rules. Within the style best suited to your personality, you could probably run through 4 or 5 strategies and not make much difference to the bottom line.

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Definitely not day trading for me. Tried that one and it was more “how to lose your money in 5 days” lmao :rofl:

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Really depends on your personality. As you can make profit day trading or swing. I do both but my biggest profits come from swing

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I don’t think there are any metrics on one kind of trading being superior to all others. You need to make these decisions based on a few factors.

  • How much time do you have? There is no point on working on a scalping strategy if you don’t have time to watch the markets during London or New York.

  • How long do you want to be in a trade? If you are trading off of a daily chart, you are going to be in trades for weeks. If that feels to long, 4-hour will be shorter and 1-hour even shorter etc.

  • How much time do you need to arrive at a decision? As a beginner, a 5-minute bar is probably too fast to reason about the market, set entry orders and place stops etc. Pick a time frame that doesn’t make you panic or seem too “noisy”.

  • Pick a technique that makes sense to you. Fibs, elliot waves, divergence indicators, Ichimoku, price action, market profile, support/resistance, VSA etc. doesn’t really matter. There are traders making money using all of these tools. FInd a technique that makes sense to you and stick with it. Most beginners hop around from strategy to strategy. This is the first and primary mistake that I see over and over.

  • Work on yourself. All successful traders work on themselves, develop rules around their techniques and are constantly reevaluating themselves continuously. Poor psychology and “blind spots” are common for everyone starting out. The sooner you start working on yourself, the better.

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Day trading for me is the most suitable, suits my style, personality, risk aversion and mindset.

Scalping on the other hand just did not click with me, but thats not say it wouldnt be profitable for someone else.

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I also think it really depends on you, your personality, and oftentimes even your schedule! :blush: If you have a lot of time to watch charts, scalping might be the most profitable way to go. :blush: But if you have another job on the side, you might wanna consider day trading or long-term trading? :smiley: Haha. :slight_smile: It’s just a matter of finding what really works best for you, I guess. :blush:

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You can check out subreddits /r/daytrading or /r/futurestrading on reddit. There are other types of daytrading or swingtrading possible than just forex such as the micro-futures which can be 50c to 1.2 dollars per tick. Also recommended to be familiar with tradingschools.org

Trading is like golf. A golfer has to adjust their swing & form to their own style. When you try to force them into one specific way of doing things they can perform, but not nearly as well. So it’s more about fine tuning their natural swing and working the bugs out over time.

I’ve jumped around from day trade, swing trading, investing, scalping, and lately bot trading. Investing is by-far the most profitable way to operate in stocks. For options, futures, currencies, crypto…etc. It’s going to come down to personal taste, risk levels, and ability to learn & adapt.

Take note of the activities you enjoy and give you the most confidence when trading. News events, politics, economics of your interest? You’re probably a fundamentals person. Like to look for key spots on a large timeline and collect profits days/weeks/months later with minimal babysitting of the position? You’re probably a low-risk swing trader. Have the time and energy to sit down at certain times during your day, set up scanners for alerts, or skim currency pairs for your setup? That fits the general activities of a day trader or scalper.

Others like mechanical trading, where they have a firm set of rules and enter/exit no matter what. Some look for specific patterns, phases of the moon, key days/weeks/hours, ratios between highs & lows; these are subjective trading methods.

The common thread of successful active trading is planning, conservative positioning, and consistent actions.

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Only way to know is to try it out on a demo account and see where your talent shines then open a small real account (but remember you will always be learning.) I like trading on solid news and trends like the safe haven currencies were all vogue then in comes Coronavirus and everything goes full reverse and then flips back again bar Switzerland for obvious reasons. Now Germany is showing some real bad signs so EUR looking weaker against certain currencies. It’s good to know why things change, all about perspective and whose controlling the real leverage. Also keeping an eye on a combined MFI/ (accumulation/distribution) helps as just because the price is going up doesn’t mean the money is flowing in and vice versa. But you only get to appreciate what works for you specifically by trying it out through various sessions and time periods and trading conditions and all those other changes. Enjoy.

My first inclination - “the winning kind!”. That’s a dad joke right there.

You make trading your own. If you can repeat success, win more and bigger than your losses, what else do you need?

There is test in Babypips school to find out what type of trading fits your personality. It’s simple but effective. Helped me a lot, because then you know what to focus on.
Also using strategies that fits your personality helps reducing mental stress while trading.

This is like asking, which position is more important in Basketball, power forward or a playmaker?

The answer is, it depends on how good of a players are both.

I’ve experimented on all timeframes, and found the daily timeframe to be the most “profitable”. I prefer the daily because:

  1. you can take your time researching and entering your position
  2. transaction costs are tiny relative to your wins and losses
  3. the major players move the market by trading long-term, so you can follow their lead
  4. you can integrate all forms of analysis (technical, sentiment and fundamentals)

With the shorter timeframes (1H and below), transaction costs become insurmountable. I’ve never found a way to make money here. Even if you develop a good strategy that works on paper, once you add in transaction costs, your positive edge will likely turn negative.

Just my 2c.

Based on my experience buy and hold is the most profitable in long-term, because despite high short-term gains of scalpers they rarely survive for a long time in the market. It is especially true when volatility increases and many of scalpers get out of business because of using high leverage.

Hi, scalping strategies are the most profitable strategies BUT they are very sensitive to market changes, backtesting requires very high-quality tick data which are expensive and a VPS server with good hardware configuration. Well, think about whether you are able to meet these requirements. :grinning: Regards Greg

Hi even i prefer scalping as the most profitable if we use the right strategy and broker.

Whichever gives you consistent results