Have you ever felt stuck trying to figure out what type of Forex trader you are and the trading strategies is suitable for you? This article will help you find the answers.
February 19, 2019 | AtoZ Markets - It might interest you to know that in the currency exchange industry, Forex traders employ a multitude of strategies to help fortify their position in the market as well as guarantee significant profit.
However, every trader has their own distinctive style of trading Forex, and knowing one’s personality is essential since it highly influences your decisions as a trader. Hence, this article will help you to look at the different types of professional or semi-professional Forex traders with the purpose of helping you to know where you belong.
There are four main types of Forex traders and they are:
- Day trader,
- Swing trader,
- Position trader,
1. The Day Trader
This type of trader usually prefers short-term trading results. Day traders choose to open and close a trade in a single day with either a profit or loss. This strategy, of course, saves them money on broker fees usually charged when a trading position is left open overnight.
Typically surrounded by multiple screens, day traders monitor the markets and decide which way chosen currencies are likely to move and then open positions that will be monitored throughout the trading session.
Since they want a quick turnover rate, they usually engage in a high-volume trade, perhaps taking 5 pips here, 10 pips there, as they focus more on technical trading patterns. While this suggests higher returns, a day trader always faces more risks just to earn a profit in a short period of time.
Nevertheless, day trading is ideal if you prefer to trade Forex during the day and keep your evenings free for other activities.
2. The Swing Trader
This type of trader is somehow the opposite of a day trader. They usually keep their buy/sell positions open for several days at a time.
These types of traders apply long-term Forex trading strategy as they can’t monitor their charts throughout the day. They execute trades when they think that there is a high probability that they can make a profit.
Hence, they dedicate a couple hours trying to analyze the direction in the market every evening to make sound trading decisions. Swing trading is ideal for you if you are always engaged during the day. You can use your evenings to analyze the market data and take advantage of medium-term market movements.
3. The Position Trader
Like the Swing trader, short-term market movements do not excite the position trader as they hold their position open for several weeks, months or even years.
Swing traders base their trading decisions on those two major factors, fundamental analysis and technical analysis.
Bear in mind that to be a position trader, you will need a significant amount of trading capital. Therefore, position trading, as we have explained, is not for amateurs.
4. The Scalper
Scalpers open their trades for few seconds to a few minutes at most. They act fast and hold a buy/sell position during the busiest times of the day in a much more frequent approach with the objective is to obtain very small amounts of pips as many times as possible.
High octane Forex trading is not generally suitable for newbies as it requires a piece of intense market knowledge and risk assessment. However, if you are immune to stress, it could be a successful trading strategy.
Now that you have a clear idea about the type of Forex trader you are, it’s time to use it to your own advantage and learn more as you try to apply it yourself.
However, no matter what type of trader you are, it’s essential to stay updated on Forex signals and news 24/7 so you get a full glimpse of trading opportunities and risks you’re facing along the way.
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