There are a wide variety of forex traders, each of whom will benefit most from a unique set of tactics.
Find out what kind of trader you are and whether day trading or position trading is more your type.
In this article, we’ll take a closer look at four types of Forex Traders who operate in the largest market in the world.
Four Types of Forex Traders You Should Know of.
Some examples of popular Forex trading strategies include: scalping, day trading, swing trading, position trading, algorithmic trading, and event-driven trading.
Read about the different personality types below to see what traits are most successful for each.
1. Scalper
Traders known as “scalpers” hold positions for only a few minutes at a time. When trading in the foreign exchange market, “scalping” refers to the practice of making quick, little profits during the market’s busiest (most liquid) periods of the day.
Being constantly mobile is essential to their profession, therefore they are never at rest.
You have to be aware, instinctive, and quick on your feet, but you also have to be able to keep your cool under great scrutiny if you want to succeed in a field where you are continuously absorbing new information and reacting to rapid market changes.
2. Day traders
Day traders are active all day long, making dozens of trades in the intraday time frame.
Similar to scalpers, day traders will not hold any positions overnight, but will instead close them all before the market closes.
This means that adverse news that may normally affect prices before or after the market starts has no effect on the buying and selling that occurs during that time.
Successful day trading involves a willingness to act rapidly and an awareness of tactics peculiar to day trading, such as fading the gap.
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3. Swing Traders
As a rule, swing traders keep their investments open for several days, and perhaps weeks.
Swing traders, who typically put more emphasis on technical analysis than fundamentals throughout this time frame, should nonetheless keep an eye out for news items that could trigger volatility.
Although a heightened awareness is less critical for swing traders than it is for scalpers and day traders, it is nevertheless important to keep an eye on the details when evaluating charts.
Take the time to educate yourself on the market swings and the strategies you might employ to profit from them.
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4. Position Traders
Position traders typically hold their trades for long periods of time, sometimes for years.
Due to the nature of position trading’s holding periods, position traders are more interested in an asset’s long-term performance than its short-term fluctuations.
Being a good forex position trader requires patience, as your funds may be unavailable for long stretches of time.
Sharp analytical skills will be important for more long-term transactions when a thorough familiarity with fundamental factors is helpful.
There’s always room to learn and improve, and put your skills to the test in the marketplace in fresh ways, no matter what your approach is or what your ultimate ambitions may be.
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