Types of Forex Traders
May 29, 2009 by
Filed under TRADING DYNAMICS
Finding a trading strategy that will work for you is one of the most important aspects of being a successful forex trader. However, even the best of trading strategies will not do you any good if you cannot determine what trading style is. Forex traders are basically categorized into three groups; Position traders, Scalpers and Day traders. For anyone to be able to make money with forex, they have to discover under what category they fall and make it work for them.
The position trader
As a position trader, you often go for long-term gains as opposed to making a quick dollar. Often, the trades that you place will be based on a 1-hour or 4-hour candlestick chart. For you to be able to cut it as a position trader, you have to have a high risk tolerance. The profits that will be generated will probably be over 50 pips even as much as 400 pips or more.
Attributes of the position trader
A position trader will only make a handful of trades in a year. They are interested in all the details like the GDP, interest rates, job market etc. day-to day fluctuations will not bother the position trader much. You will not find him in front of the computer watching the charts. This type of trading does not require constant attention from the trader.
The Scalper
A scalper’s aim is to make small profits and quickly. The profits will range from 3-10 pips. The trades that the scalper makes are based on 1-minute to 5-minute candlesticks. The scalper will often make multiple trades in a single day.
Attributes of the Scalper
The scalper is very interested in the day-to-day fluctuations of the market. You will find the scalper in front of the computer for hours at a time watching the charts. He is also likely to be a religious reader of newspapers, economic data and anything that is likely to affect the market and their trade.
The Day Trader
A day trader holds an open position from 15 minutes to an entire day. S/he may use a set time frame or even two different charts with 5-minute and 15-minutes candlesticks. A day trader will aim to make profits that fall anywhere between 10-50 pips. Most new traders want to become traders; it looks exciting from the outside. However, it is not as simple as that, mastering the art of day trading is not an easy fete to achieve.
Attributes of a Day trader
The day trader will watch the market constantly and sometimes all day long. S/he will close all positions when the day comes to a close. The day trader does not allow themselves to have large losses. They will make several trades in a day; they will get in and out many times during the day.
Discovering what kind of trader you are will depend a lot on your personality. You cannot try to be what you are not. Choosing to be a trader that will match your trading strategy is crucial to making a killing in the forex market.
