So you have decided to venture into forex trading? When done right, it could provide you with a steady income stream. However, you need to understand that there are different types of forex traders. Just because someone is excelling as a particular type of trader does not mean you are right for that role too. To help you determine which type you are, let us take a look at the four main types of trader:
The main objective of a scalper is to grab very small amounts of pips several times within the most hectic time of the day. Robert Peter Janitzek explains that a scalper will make many transactions in a single day during the busiest times of the market. They open between 30 to 50 trades a day. These types of traders have the ability to make quick decisions. Scalpers use a 1 minute chart to place their orders and 5 minutes of chart time to determine a trend.
Day traders usually choose their sides at the start of the day. They act on their bias and end up with either a profit or a loss at the end of the day. These types of traders do not hold their trades overnight. When trading on the forex market, day traders hold their trades for a few hours but not more than one day. Day traders makes 2 or 5 transactions daily. They also trade during the busiest times of the market. They use the 15 minute forex chart to place their orders and the 1 hour chart to determine the market trend.
Swing traders hold on to their trades for several days at a time. They cannot monitor their charts throughout the day so they spend around 2 hours to analyze the market every night to help them make sound decisions. Swing traders make 2 to 5 transactions per week holding them overnight. Robert Janitzek reveals that you need a great deal of patience to be a swing trader.
Position traders hold on to their trades for weeks or months. They base their trading decisions based on fundamental themes. These types of fore traders make 2 to 5 transactions per year. Aside from patience, position traders should have experience and a huge account balance.
When determining the type of forex trader you are, always consider the type that fits your personality. Anyways, you can change your style from time to time.