A trading style is mostly a choice of how long you hold each trade. That choice sets the chart you read, the width of your stop, what you pay in costs and which challenge rule will test you hardest. Choose the style that fits the hours you really have, then check it against the limits before you commit.
What you will learn
- The four main styles, sorted by how long a trade stays open
- How to match a style to your free hours and to how you handle open losses
- Why costs weigh more as your stop gets tighter
- How the CMC Funded limits and minimum trading days treat each style
Four styles, sorted by holding time
The figures below are typical examples on EUR/USD, where a pip, the standard unit of price movement, is 0.0001.
- Scalping holds for seconds to a few minutes on a 1-minute chart, with stops of about 3 to 6 pips and many trades a session.
- Day trading holds for minutes to hours on 5-minute to 15-minute charts, with stops of about 10 to 20 pips, and closes everything before the session ends.
- Swing trading holds for several days to a few weeks on 4-hour and daily charts, with stops of about 50 to 120 pips.
- Position trading holds for weeks to months on daily and weekly charts, with stops that can run to several hundred pips.
A longer hold needs a wider stop, so the position is smaller for the same dollar risk. With $50 at risk, a 10-pip stop allows 0.50 lots and a 100-pip stop allows 0.05 lots. Short styles keep you at the screen, while long styles ask you to leave positions alone through nights and weekends.
Start with the hours you can protect
Write down the hours in a normal week when you can watch a chart without interruption.
Say you work 09:00 to 17:30 in London and are free from 06:30 to 08:30 and after 20:00. You catch 30 minutes of the London open at 08:00 UK time, and you are at work through the London and New York overlap, 13:00 to 17:00, the busiest stretch for the major pairs. Many forex charts close the daily candle at the 17:00 New York rollover, 22:00 UK time for most of the year, so you could review daily charts late in the evening or before work. That week suits swing trading.
Free from 13:00 to 17:00 instead, you would have the overlap itself, which suits day trading or scalping. The trading sessions lesson gives each session's hours in UK time.
Check how you handle open losses
Can you leave a trade that is $80 down overnight without closing it or moving the stop? Swing and position trading ask you to do that most weeks. If an open loss keeps you checking the price, a style that ends every day flat will suit you better.
Can you make 20 quick decisions in an hour and stop after your second loss? Scalping and day trading ask for fast decisions and a firm stopping rule. If a loss makes you want to win the money back straight away, the speed of these styles makes that urge more expensive. The trading psychology lesson covers revenge trading.
Feedback speed differs too. If you want 50 trades before judging a strategy, a scalper taking 15 a day gets there in four trading days, a day trader taking 3 a day in about 17, and a swing trader taking 2 a week in about six months.
Costs weigh more as your stop gets tighter
Simulated trades carry trading costs, as they would on a live account: a commission when a trade opens and when it closes, a price markup on some symbols, and holding costs on positions kept overnight. Compare those costs with your stop, because the stop is your risk on each trade.
Take an illustrative 1.8 pips per round trip (the open and the close together) on EUR/USD. It is an illustrative 1.2-pip spread plus about 0.6 pips of commission, rounded from the CMC Funded rate in the spreads and trading costs lesson.
- On a 4-pip scalping stop, 1.8 pips is 45% of the risk on every trade.
- On a 12-pip day-trading stop, it is 15%.
- On a 70-pip swing stop, it is about 2.6%.
Short styles pay these costs many times a day. Swing and position trades pay them rarely, but they pay holding costs for every night they stay open, so a trade that drifts sideways for three weeks keeps costing you.
How the CMC Funded rules treat each style
Every style in this course is allowed on CMC Funded, including news trading and holding overnight and over weekends, with holding costs, and there is no minimum time a trade must stay open. The terms do rule out methods aimed at the platform rather than the market, such as latency arbitrage, order flooding, and martingale or grid systems that add to losing positions. Three rules affect the styles differently.
The daily loss limit is 5% of your equity at the start of each day on Classic and 4% on Direct. It is measured on equity, so open positions count against it, and reaching it ends the account. On the first day of a $10,000 account the limit is $500 on Classic and $400 on Direct, and each style meets it in its own way:
- A scalper risks $20 a trade and pays $9 of illustrative costs on top, so each full stop-out costs $29. Fourteen in a row cost $406, which is past the Direct limit and about four-fifths of the Classic one.
- A day trader risking $50 a trade reaches the Direct limit with the eighth straight loss and the Classic limit with the tenth.
- A swing trader holds two related positions over a weekend, each risking $100. Monday opens beyond both stops and each stop fills 50% further away than planned, for a loss of $300: 75% of the Direct limit and 60% of the Classic one.
The minimum is 3 trading days in each Classic phase and 3 on Direct. A scalper or day trader usually meets it in the first week. A swing trader opening one or two trades a week may take longer.
Neither route has a time limit, so a slower style never has to speed up to finish, and a week without a good setup costs nothing. The rules page lists every limit by account size.
Check your understanding
You can only trade from 20:00 to 22:00 UK time on weekdays. Which style fits most easily?
Swing trading. Your hours miss the busiest times for the major pairs, but they leave enough time to review daily charts and set orders and alerts.
Costs are 1.8 pips per round trip and your stop is 6 pips. What share of your risk goes on costs?
30%, because 1.8 ÷ 6 = 0.3. The same costs on a 60-pip stop would be 3%.
Why does a swing trader on a $10,000 Direct account need to think about Monday mornings?
The $400 daily limit is measured on equity. A weekend gap can fill several stops well past their levels at once, and the whole loss counts towards that day's limit.
Key points
- Holding time defines the style, and it sets your chart, stop, position size and costs.
- Choose from the hours you can protect each week, then check how you handle open losses.
- Costs take a bigger share of your risk the tighter your stop. Longer holds pay holding costs instead.
- The daily loss limit tests short styles through runs of losses and long styles through gaps.
- With 3 minimum trading days and no time limit, slower styles take longer but never face a deadline.
Next lesson: Work out whether a scalp can cover its costs
All trading is simulated. Rewards are based on performance and are not guaranteed.