When it comes to trading, it is well known that each of its types comes with very different approaches. In fact, as little as three traders may have more than ten to twenty ways by which they usually trade.
This is how complicated the world of Forex trading is. However, if we are to talk about Forex traders in general, we can take a look at the types of trading approaches used by Forex traders and then determine four major types of traders.
Therefore, without any further ado, let’s help you figure out what type of Forex trader you are!
The Scalper Trader
As a scalper, you have to get the best out of the busiest times of the day. Despite that, you hold onto traders for either a couple of seconds or minutes – you don’t like wasting too much time.
Essentially, a scalper wants to grab rather small amounts of pips – but as many times as they can during the trading rush hour.
The Day Trader
As the naming implies, day traders start their work early in the morning and try to make the most out of a day – via trading, of course.
This type of trader finishes the day with either a loss or a profit and, most importantly, don’t hold any trades overnight. They go in and out of the market on the same day, without taking too many risks.
The Swing Traders
A swing trader, on the other hand, will hold onto a trade for a couple of days. This is because, unlike day traders, they can’t consult with their charts or portfolio all day long.
Instead, they do their research in the evening, for a couple of hours, and then they either buy or sell, depending on what information they have.
The Position Traders
Lastly, position traders have trades that can last for up to several years – but more commonly weeks and months.
These types of traders put their trust into fundamental themes and trends, analyze the markets as such, and then determine which trades will bring them a profit in the long run.
Naturally, they don’t rush their decisions and make sure that a certain trade is really worth engaging in.
The Bottom Line
So, how do you find what type of trader you are?
Well, the key is to start as a scalper and then determine whether it fits you or if it’s too draining or too fast. If the latter applies, then you can move on longer periods and see if they fit you as well.
On the other hand, it is quite important that you don’t change trading types too often, as you can easily get into financial trouble if you do so. After all, you can’t have a successful switch when you move from a yearlong trade to one that takes just a couple of minutes.
Determine what type of person you are, financially speaking, and then try to find which trading type fits your financial persona the best. If you want to live in the moment and see results or failures instantly, then try scalping – if you want to work weeks, months, or even years for that one perfect trade, then you may want to be a position trader!