Do you know how many Trading Types are out there?
We’ve all heard the phrase “to each their own,” which means that everyone has their own taste or style, which could be totally different from another’s.
With so many market participants and so many different goals in the Forex market, this couldn’t be more valid.
So, in order to become a long-term effective trader, you’ll need to find out which of these (or probably a combination) trading styles best fits you based on the amount of time you have to devote to it each day, your risk tolerance, and your interests.
Are you ready to choose your Trading Style?
There are 4 types of traders
- A scalper is a trader who wants to enter and exit positions in a matter of minutes, if not seconds.
- They are usually looking for very active liquid markets with unpredictable or drastic price fluctuations, or they might see a price difference on a cross that they think they can profit from before the rest of the market does.
- Scalpers assume that their ability to be in and out of the market in a matter of seconds enables them to have very low overall market exposure and reduced risk.
- However, they typically trade in large quantities, which, if their transaction costs (spread, commissions, etc.) are not kept in check, would eat up any profits they may have.
In conclusion, scalping is now usually performed by a computer programme, which is much more effective at finding market openings and far less stressful on the trader than staring at their screen all day.
You are wandering what is a day trader?
Day traders usually only trade for a few hours at a time.
They usually “day trade,” which means they are in a trade for the day and close it out by the end of the day.
Day traders conduct even more technical and even fundamental research than scalpers, and they have more time to track and change a trade if necessary.
Day trading is for active traders who have time during the day to keep up with current news events and can change their minds on the move if they see a better opportunity elsewhere.
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A swing traders can hold a spot for a longer period of time than Day traders.
Swing traders will keep their positions open for a few days, if not weeks.
Since they are seeking to catch broader market price fluctuations and have much looser risk parameters than short time frame traders.
They do a lot more market analysis and aren’t as concerned about the exact price they get in and out of positions, nor do they care as much about the spreads they are offered by the broker.
Swing traders are a diverse community of traders with a strong technical orientation (charting) as well as a comprehensive understanding of market fundamentals, with a specific focus on economic news announcements.
And we cane to the last trading type of trader, position traders are long-term investors who hold positions for weeks, months, or even years.
They are interested in very long-term market movements and can only check on their positions once or twice a week at most.
Since position traders aren’t actively watching the market, they tend to use very broad Stop and Limit Orders in order to take advantage of any long-term trading opportunities they come across.
When making a trading decision, position traders typically look at structural changes in the global economy, the health of individual economies, or their interest rate policies.
I think you know already wich type of trader you are.
In conclusion, befor you get started, make sure you choose the right type, or combine them to suite you the best.
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