Finding your preferred trading style in easy steps
We may classify the Forex traders into different groups depending on their approach to the market. Whether they prefer the fast-paced execution of day-trading or the long-distance marathon named position trading, choosing the right approach for you will increase your winning chance.
Continue reading to learn more about the various types of traders who operate in Forex, the largest market in the world.
Forex traders typically fall into one of these six trading categories: scalper, day dealer, swing joiner, position dealer, algorithmic trader, and eventually event-driven trader. Learn about various types and character traits.
Scalpers are those short-term traders who focus on holding their positions for a few moments, seconds, or a few minutes. Strategies for Forex scalping entail trading frequently all day in order to achieve small profit during the most liquid times.
The lives of scalpers are fast-paced. Fetching new information, analyzing them, and reacting to even the slightest market changes are something they do daily. For these, they need to be over observant, quick-witted, and instinctive. They also have to know how to deal with the psychological pressure felt while scalping.
2. Day Trader
Liker scalpers, day runners also execute multiple traders within a day. Though their strategy doesn’t need them to be fast-paced as scalpers, they also close their positions before the day ends. They never get to hold their positions overnight. In short, they buy shares and closes the trade within the same day regardless of the floating profit or loss.
That sometimes great news for the quick traders as no future news can affect their trades. To succeed as a quotidian trader, a person needs to adapt to sudden changes as quickly as possible. He also needs to be thoughtful of the strategy that empowers his trading style.
3. Swing traders
This type of trader holds onto their positions for more than a day. The maximum timeframe for their trade can sustain a maximum of a few weeks. Over this small timeframe, they favor technical analyses over the fundamental ones. However, they need to be tangled with the recent happenings and news that stimulate market volatility.
They usually take long term decisions in the market. That’s why they don’t require to be extra alert. However, it’s crucial for them to keep a sharp look at the details expressed by different charts.
4. Position Traders
These people hold their trades for a much longer period. Their timeframes can exceed from one week to even a few years. It is the trading style that requires the longest period of market involvement from the investors. So, the people who have chosen this style for currency exchange don’t have to worry over flickering short time change of direction of the market.
Patience is the most valuable characteristic that a position dealer can have. In addition, having a thorough knowledge of the fundamental catalysts of the market is essential for them. Any type of advanced skill of analytics will play in favor of a position trader.
5. Algorithmic Type
Now, these people greatly depend on programs and software to enter a trade at the most optimal price. They can use some defined instructions or different high-frequency algorithms. They can coder their software by themselves or buy the ones that exist already. This style suits those who are tech-savvy and have no issue in applying technology in Forex’s career.
6. Event-driven traders
These traders depend on fundamental instruments over different technical charts to know about the market conditions. They will seek to be benefitted from economic and political events, like data of non-farm payroll, GDP, elections, etc.
So, these are types of traders that dwell in the Forex market. One needs to be very peaky before choosing his style. It will devise his lifestyle for his entire career.