It really doesn’t matter who we are or what stage in life we’re at. You could be in school and you can’t seem to figure out the rules of global finance. You could be holding down a job but you desire to make a decent second income in your spare time.
Currency is in every facet of our lives, so why aren’t you cashing in on it?
One of the Key elements of successful trading is having a specific strategy that tells you what to do. When you follow a concise strategy, nothing is left to emotional triggers and everything boils down to following the rules of the strategy.
Even with a successful trading strategy, some traders still seem to suffer consistent losses rather than consistent profits like their peers. This goes to show that pairing a successful strategy with your personality is far more important than blindly following an established trading strategy.
There are five categories of forex traders:
Traders who like fast action. They enter and exit the forex market multiple times a day, taking a few pips each time. With the need to react to market movements quickly, scalping is most suitable for traders who can devote their undivided attention and focus on the charts for a couple of hours at a time.
Additionally, Scalpers need the ability to think on their feet and switch the direction of their trades fast if the situation calls for it.
2. Day Traders
Day Traders don’t like to hold a trading position overnight. They typically put on a trade at the start of the trading day and tend to close it before the day is over.
Unlike Scalpers who avoid the news, Day Traders love trading the news. Keeping abreast of the daily news releases actually helps them to plan their trades more effectively.
3. Swing Traders
Swing Traders normally hold trades beyond a day but never beyond a week. This trading style is most suited to part-time traders who have full-time jobs.
Swing Traders tend to be a bit more conservative that Scalpers or Day Traders. They typically wait for several confirmation signales before triggering a trade.
4. Position Traders
Position Traders have the longest time horizon of the different categories. The total opposite of Scalpers, Position Traders can sit on a trade for several weeks to several months.
Position Traders have a very strong grasp of market fundamentals and are able to spot changes that could lead to highly profitable long-term gains once trades are locked in. Depending on the currency pair, the profit potential per trade can range from 500 pips to several thousand pips.
5. Mechanical Traders
Usually beginners in the forex market, their main focus in trading the markets is not time driven but system driven.
After going through a period of trial and error, Mechanical Traders deem a particular strategy sound and focus only on the execution of that strategy based on its rules.
We are how we trade and we trade how we are. Your unique personality will cause you to trade differently from someone else.
The key here is to discover which category you are in. The FXPRIMUS Training & Education team have an online test that helps you determine just that.