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Different Types of Forex Traders? Scalping, Day Trading, Swing Trading and Position Trading

Different Types of Forex Traders? Scalping, Day Trading, Swing Trading and Position Trading

Here Is Why You Should Master Different Styles Of Trading

Forex trade has a lot to do with the psychology of the people involved. This is why there are many different types of trading styles, each unique according to their creator. People have different behavior, and their perception and understanding are also unique. As such, no two people will trade similarly.

Trading personalities

Different Types of Forex TradersJust like personality traits which are unique to each trader. Oftentimes, trade personalities correlate to the trader’s personality. This is why it is important for one to be honest to oneself when entering the market.

Being honest with oneself will enable you to reflect internally to determine your lifestyle and personality traits. Having this knowledge before settling on your trading strategy is the best thing you can do yourself. Later, when you create a trading plan, you are almost guaranteed to earn good returns when you begin trading.

Oftentimes, traders fall by the wayside because they use trading styles, which conflict with their trading personalities. There is a need to research and experiment with different types of trading styles to arrive at the one which agrees with your style.

Trading with a style with which you are not comfortable will lead to a huge number of mistakes on your part.

What are these trading styles?

The unique nature of trading personalities implies that each person has their strengths and weaknesses. In particular, there are those who work best under pressure, while others prefer utmost comfort. Also, personalities differentiate between relaxed and aggressive traders. The aggressive type will want to land huge wins and do not mind-blowing their accounts. On the flip side, the relaxed types are content with small wins as long as they do not make losses.

On account of this, there are trading styles which suit organized individuals who lack enough time to follow the market. Another trading style is that which suits cautious/relaxed traders who have time enough to research the market while the decisive traders prefer a style which generates instant results.

The bottom line is that be honest with yourself and find that trading style which agrees with your trading personality.

Your Most Important Investment As A Forex Trader

Start Forex Trading By Learning The Basics

Forex is indeed lucrative. Once your trades go the right direction, you can potentially make a windfall, like scammers like to tout online. But is this the case every day? No is the short answer.

Start from the bottom

The best approach to forex is bottom-up. If you are a newbie, nobody should lie to you that you can earn anything armed with two days of reading and a trading system bought online. This is an illusion which can smack your face hard once the market begins to act up, and it does!

The best way to approach forex is to begin by learning the basics. Start from the bare bottom and establish slowly via constant learning. Make use of every second you get to score the internet for learning materials before settling for anything offered by a trading vendor.

Determine how much time you will need to learn the basics of forex. Then go ahead and allocate time to understand news reports, how to read charts, learn to record your trades and trade every day if you can dedicate full days to this endeavor then the better. Whatever experience you gather here will help in formulating realistic expectations concerning earnings.

Learn market analysis

After having tested the waters and it is now clear that forex is what you want to do, it is now time to learn analysis. Market analysis is what every trader must-do if you trade using a self-made trading system. Analysis done by other people is not always correct since not all trading systems are the same.

The market analysis focuses on five major things which one should incorporate in their daily routine. First, one must have an ear out listening for the talk of the town. Follow market developments, especially what other analysts are touting as crucial.

Secondly, keep an eye of fresh news releases and what substance they carry, which could swing the market. Also, watch for the latest prices of crucial assets like oil and the prices of other asset classes like the US Treasury. Follow current events to gauge the global risk sentiments and, finally, read and understand charts!


You Want To Be A Scalper? Here Is What It Takes To Succeed

There are different kinds of forex traders, particularly based on the returns they desire. One trader might be out to take small wins while another one is aggressive and wants grand slams. Well, the market has space for all of you.

What is scalping?

ScalpingA scalper is that trader who is out to capitalize on the fast-moving aspect of the forex market. For a scalper, the objective is to take small wins pip by pip but done so many times. They mostly concentrate their trades during the busiest hours of trading because this the time the market is on steroids.

Successful scalping demands that you have a mad concentration span. You will spend hours with eyes glued on charts for the smallest hint of trade opportunities. The idea is to get in quick and exit as fast. If you are one with poor concentration skills, then many opportunities to amass pips will slip through your fingers.

You are not a scalper if fast trading is not your thing. Also, you must have the capacity to stare at charts for long hours to spot entry and exit opportunities. A scalper is the most impatient trader in the market. One has to think in seconds and be able to change the direction of decisions just as fast. Oh, and you have to be a fast typist!

Tips for a successful scalping experience

Well, you are fast in thought and typing, and you are as impatient as one can get, is that all to clinch scalping gold? A big NO.

You need to identify the most liquid pair in the market to make scalping happen. These are the majors like GBP/USD, EUR/USD, and USD/JPY, among others. Next, identify periods when there are session overlaps since they are the busiest and huge amounts of money are exchanged in split seconds.

Oftentimes, the market tends to move against you. Therefore, try always to double your spread to account for such movements. To achieve this, you should focus on a single pair at a time. This will ensure that you do not miss a profit-making opportunity for one pair while concentrating on the other.

Day Trading

Here Is What You Should Know About Day Trading

There is a lot a forex trader can accomplish if one does not have a day job. This is to say that you have the whole day to yourself to do forex stuff. Day trading is one thing you could consider because all you need is a whole of analyzing the market and entering positions.

What is day trading?

A day trader has a short term bias to their trades. This technique involves taking trades and exiting them on the same day. Typically, one takes a single trade and then closes it after the day winds up. Interestingly, it doesn’t matter whether the trade ends up in a loss or gain.

While it is not fast-paced like scalping, day trading is just fast enough to mint returns in a single day.

A typical day trader strictly restricts trades within a single day. They do not hold positions overnight. Also, this is someone who can dedicate the early hours of the day to market analysis and can monitor trades all day. Day traders take stock of the day’s activities and try to establish if they made a loss or earned a profit.

What does it take to be a day trader?

Day trading is nerve-wracking, and it involves a lot of decision making. This is to say that traders need plenty of information. Therefore, there is a need for constant acquisition of knowledge by a trader. Keep abreast of relevant economic news which carries weight on the pair(s) which you decide to trade that day.

You cannot manage day trading if you do not have the time to monitor your trades. After having done your analysis in the morning, a lot of things might happen during the day. For instance, there could be a major event like a spike in the price of oil due to tensions in one of the OPEC nations. As such, you need to be on standby to make necessary adjustments to reflect such events.

Ultimately, you must know and understand the types of day trading to know where you are and what kind of decisions you should make.

Swing Trading

The forex market is complex, risky, and rewarding all at the same time. It just depends on what kind of trader you are and if a few losses cannot get under your skin. Depending on temperament and trading personality, traders choose to make quick gains or stretch out the trading a little bit longer. Let us learn about swing trading and see where it fits.

What is swing trading?

Swing TradingSwing trading is a trading style which lasts for longer than day trading or scalping, usually between a few days and a week or two. It requires patience on the part of the trader.

Ideally, swing traders are those who have scarce time to keep a constant eye on the market. Instead, one only has a few hours, say some two to three hours after their day job, to analyze the market and take some positions.

The trader identifies swings in a potential price move. This price move could be an uptrend or a downtrend. The idea is to go short where the price move swings up and to go long at swing lows. Essentially, the main objective is to exploit countertrends, which might be temporary.

Some tips to excel at swing trading

Similar to other trading styles like day trading, one needs a lot of information and technical analysis skills to make it here. However, you are better off if you master a few strategies, some of which will be discussed herein.

In your technical analysis, always take note of Fibonacci retracement pattern. Particularly, this strategy is crucial in identifying support and resistance levels for the particular asset. As such, you will be in the position to anticipate levels of possible reversal on the chart of the asset.

Another helpful strategy is channel trading. Essentially, the idea here is to identify a currency pair whose trend is strong, while trading within a channel at the same time. Depending on the channel you have plotted, you will open a position by either going long or going short.

The idea is to stick with the trend. If the price breaks out of the channel, you will identify the movement as signaling a potential reversal.

Position Trading

Learn These Skills If You Want To Be A Position Trader

While there are those traders who thrive in high adrenaline situations, some prefer to take the safest stance when it comes to risk-taking. Position traders are such an example. Usually, the traders hold their positions for the longest term which could stretch into years. This crop of traders are ultra-patient and have a lot of trust in their analyses.

Fundamentals of position trading

The basic requirement for one to succeed as a position trader is to have very accurate long-sightedness. Particularly, one enters this long position to leverage the potential of dominant trends. As such, one is not bothered by short-term market movements which are of much interest day traders and scalpers.

Position trading relies on fundamental analysis as well as sufficient mastery of technical tools. Further, you will need to have a sizable trading account to survive in this trading style.

There are some advantages which attract traders to taking such a long term view of the forex market. Firstly, one can exploit the swap which is paid on the borrowed currency as well as on the one which is bought. Secondly, position traders usually benefit from correlations between other financial instruments and currencies.

Crucial skills

In addition to being super-patient, a position trader should have the ability to stay calm in the face of wild fluctuations in the market. This will enable you to think independently and to avoid falling victim to group psychology.

Independence, in this case, means that you can ignore popular opinion even when it is quite convincing. Instead, one can rely on one’s analysis, which is adjusted regularly to reflect the current reality, to estimate the direction of the market.

Also, one must have a good understanding of the relationship between economic fundamentals and currency pairs. Further, you must be in the position to get over retracements which threaten to blow your account. As long as you have a robust trading system, and you have enough confidence in it, stick to the ground and watch things unfold. Ultimately, it is the desired destination which matters, and nothing should sway you off course.

What Type Of Forex Trader Are You?

These Are The Four Types Of Forex Traders, Which One Are You?

Forex trading is highly depended on the person doing it. This true even for automated trading since a human creates the system. In particular, the differences in trading styles arise from unique personalities for each of the traders. Here is a look at the four trading types.

The Scalper

Scalping is one of the most popular trading styles which professional traders exploit. It is the most short-term, and traders rely on small pips collected several times to build a huge profit in the long term.

The name arises from the practice of trying to skim off profits from several trades throughout a trading day. For a scalper, catching profits from small fluctuations in forex prices is easier than in huge fluctuations.

The day trader

While day trading also takes advantage of small moves in forex prices, it is a longer version of scalping. Usually, a day trader opens a position in the morning and exits the market at the end of the day.

A day trader is simply a scalper who spends less time staring at charts and has a larger trading account to boot. This kind of traders reviews their closed positions to determine whether they have clinched some profit or made some losses.

The swing trader

On the other hand, swing traders are willing to hold onto their positions for a lot longer than both day traders and scalpers. A typical day trader dedicates a few hours to trading per day. This time is spent analyzing charts and latest developments so that they can make adjustments to their trading systems.

Swing trading is just as risky as any other due to the volatility of the market. The fundamental objective of a swing trader is to lock in reasonable gains in short periods.

The position trader

On the end of patience is position trading. This crop of traders is ultra-patient and can hold trades going into years. The predominant factor in the analysis conducted by position traders is the fundamental themes of the economy.

Where do you belong? Essentially, it is just a matter of how much pressure you can handle and how patient you can be.

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