Bulkowski’s Trading Types

What type of trader are you? Find out here. The following is based on a questionnaire I asked of nearly 70 traders, with 20 responding. These categories are not strict definitions because the amount of time trading and researching varies from individual to individual.

Be sure to return to the home page for more trading information.

Scalpers

• Method: tries to profit from market inefficiencies and small price changes. A large trading volume compensates for small profit margins. With decimalization, it’s harder to make money being a scalper, so a blend of approaches are used (such as swing trading).
• Typical hold time: varies from seconds to minutes to several hours.
• Trading day: tends to be short (2 to 4 hours) because the concentration needed to be successful is tiring. Needs uninterrupted trading time. A scalper is also a day trader. This is their day job, a full time job.
• Research time: several hours daily to follow market developments and exploring new techniques, ideas, and markets, looking for the next trade and refining skills.

Day Traders

• Method: Usually trades a small group of securities each day, closing out most or all positions by day’s end. Day traders are range traders, buying low, selling high, and then reversing. Day trading is less intensive than scalping.
• Typical hold time: can be minutes, but is usually hours -- longer than a scalper.
• Trading day: Several hours long (2 to 4). Needs uninterrupted trading time. This is their day job, a full time job.
• Research time: two to four hours daily with some spending extra time on the weekends. Some say the trading part is small, but the hunt for opportunities takes hours.

Swing Traders

• Method: time the market by buying at the swing low and selling at the swing high, or the reverse. Trades can last from minutes to days, sometimes weeks. Swingers often hold a position overnight. They take a longer view of the markets than day traders.
• Typical hold time: less than 3 days. Some will say 8 to 10 weeks, but they are better classified as position traders.
• Trading day: More relaxed than day traders. Can have a different day job, but it may be difficult to trade while on the job. Interruptions to the trading day are tolerated.
• Research time: Not as intensive as day traders.

Position Traders

• Method: buy low and sell high or the reverse, not swing trading, but trend following.
• Typical hold time: often weeks to months but not forever, selling when the trend changes.
• Trading day: Spends little time trading and more time researching. Position traders are often part time traders.
• Research time: For those with an actual day job, researching time is relegated to the weekends and after the market close.

Investors

• Method: buy and hold a position.
• Typical hold time: long, often months and years.
• Trading day: very short, often weeks or months between trades.
• Research time: can be extensive as they sift through the fundamentals and time their entry and exits with the technical analysis or rely strictly on the fundamentals.