In becoming a forex trader, it is essential to understand the different types of traders to know which kind of trader suits your personality best. Every trader has different characteristics and habits that can significantly affect your trading journey.
Some traders can hold positions for days to get big profits, while others make a little profit and want to rush to close positions. Some traders prefer to trade casually, holding open positions with precise calculations, while others can’t hold positions too long, so they decide to perform risk management on their accounts instead. We will further discuss risk management in the following article.
All in all, there are four types of traders. Read on as we lay them down one by one so you’ll have an insight into each personality, which can help you adjust to your trading habits to get better results.
A scalper trader likes to make enough profit but trades several times a day. A scalper does this for a very short time, getting small results but making several trades in one day.
On the risk side, a scalper is also willing to dispose of a position if it is considered unprofitable, but, of course, with a small value. Usually, a scalper trades using a 1-minute to 15-minute timeframe.
A Day Trader trades within a small timeframe but not as short as a Scalper. A Day Trader still wants to wait for his position as long as it won’t last until the next day. The habit of a Day Trader is to always close positions at night when the market will close, whatever the result is.
Usually, a Day Trader uses a timeframe of 15-minutes to an Hour.
A Swing Trader uses a larger timeframe because they usually already have a much bigger target and are willing to wait a few days to earn profit.
In terms of risk, this type of trader has a measurable risk limit. So, if one of the profit targets or risk limits has not been reached, they will keep their position open.
Swing traders are part of Momentum Traders who take advantage of trends and price momentum moving in one direction. They will take advantage of the primary trend at every correction and/or breakout.
Usually, this type of trader uses the Hourly to the Daily timeframe, not closing to see the trend in the Weekly timeframe.
A position trader is a type of trader who can hold open positions longer, which could take months or even years, because they want to stay in the trend as long as possible. This type of trader sees the movement in a large timeframe and then drops to a smaller timeframe to determine the position entry figure.
Position traders usually master the fundamentals and have sufficient knowledge of global economic conditions to determine where the trend will continue.
In addition, this type of trader also has good money management so that when they are in a losing open position, the funds can still survive until the primary trend in the largest timeframe shows signs of ending. They will analyze and consider economic indicators, government decisions, and interest rates to make informed trading decisions.
A position trader also looks at the technical side of things in the daily, weekly, and monthly timeframes to get an idea of when the entry and exit points are right.
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