A person’s personality is definitely different from one another. The same is true for a trader when trading. In the world of Forex trading, there are several types of traders who have different trading styles.
Learn about the types of Forex traders
There are four types of traders in the forex world in general, namely speculators, intraday traders, position traders and swing traders. This type of trader is characterized by their risk profile, trading frequency, and target location when entering the market. Well, because the trading frequency and target position are not the same, they usually use different time frames, risk management, and trading systems.
This difference is usually caused by differences in the personalities and circumstances of the traders, because the trader may be a student who usually has more time, a full-time worker who cannot follow many prices, or he may be self-employed. , etc. . For this reason, different strategies are used in trading.
The more often a forex trader makes transactions, the higher the risk and the more his trading skills develop. The trading style of each type of trader pursues the same goal: to generate stable profits in the simplest and most convenient way for traders. Take a look at the following four types of traders and which one suits you best?
Table of Contents:
1. Scalper Trader
A scalper trader is a term given to a trader who uses speculative methods. The frequency of speculative trading is more frequent than other trades, because the trade holds positions for a very short time, i.e. from seconds to minutes. Short trades with high frequency and small profit targets. Within an hour, trades can often open and close positions.
This strategy can be applied if there is a lot of flexible time in trading, although the risk is generally higher because the chances of a whipsaw also increase. What is a whipsaw? A whipsaw is when the price suddenly and unexpectedly moves in the opposite direction. In addition, transaction costs are also more wasteful.
Usually, the profit target in this strategy is 1-10 pips per trade. This type of trader usually relies on 1-5 minute charts. Speculative strategies are best applied when the US and European markets are open, i.e. when prices fluctuate. Here are some things that exploiters should pay attention to.
Spread size
Choose currency pairs with close spreads. Avoid pairs with large spreads because the risks outweigh the benefits. Examples of currency pairs with tight spreads are EUR/USD, USD/JPY and GBP/USD. In addition, these currencies have high liquidity.
Raise the financial level
Because the scalping strategy has a high trading speed with a small profit target in a short time, the leverage used is also high, so it can generate a large percentage of profit.
2. Day traders
Day traders are traders who trade in one day. Trading operations are completed before the close of trading, either in a loss or profit state. The time required for one transaction varies from minutes to hours. Traders feel comfortable closing positions without holding positions to avoid news surprises that can disrupt prices.
Usually the day trader’s profit target is 20-40 pips, depending on the currency pair purchased. The choice of currency pairs to trade is the same as speculators, currency pairs must be volatile for a short time.
At the same time, 15-minute and 30-minute charts are used to monitor price movements. Unlike speculators who avoid news, intraday traders pay attention to economic news that can move the market further. Day trading is also known as day trading.
3. Swing trader
A swing trader is a trader who trades from a few days to a week. Traders who work full time or have limited trading hours are suitable for using the swing trading style.
In volatile currency pairs, swing traders can set profit targets of 50-150 pips or more. The charts are used as a benchmark for 1-hour and 4-hour trading.
Strategically, swing traders tend to be more conservative than speculators and intraday traders. Before moving forward, swing traders check several parameters for confirmation. Thus, they are not affected by price movements in the intraday range.
They focus more on medium-term trends. Because the profit target is larger, swing traders are not affected by currency fluctuations and wide spreads. Here are some of the benefits of swing trading:
lower risk
Swing traders have a lower trading frequency than speculators and intraday traders. Opportunities also avoid common mistakes and intraday price movements which are usually better than intraday traders.
save time
This type of trading strategy can be applied to traders who are busy and have little time to trade, so traders do not need to continuously monitor price movements.
Opening the chart cover can of course distract from work and become inefficient. This feature allows swing traders to trade while remaining productive in their field. Also, seeing too many charts can “tempt” a trader to make bad trades.
Swing traders are usually carried out by individuals who do not have a formal basis for trading in the Economist. Due to time constraints, he also does not have time to follow economic news and conduct fundamental analysis and others. Therefore, swing traders rely on technical analysis and use it as a trading guide.
Technical analysis is believed to be effective in reflecting various current market conditions through statistical parameters.
4. Position traders
Position traders are a type of trader who trades by holding positions from several weeks to several months. In terms of time frame, the trader’s position is the longest compared to other types of traders. Their trading style is the opposite of speculators who want to be fast.
If swing traders are guided by technical analysis, then they are guided by fundamental analysis with standard economic data. Even if you use a little technical analysis, trading positions use daily, weekly, and even monthly time frames.
The profit target per trade can be up to 500 pips. Some of the advantages of this strategy are saving time so you can focus on your activities without constantly monitoring prices because you rarely trade, of course transaction costs are also very minimal and you can even get the opportunity to make a profit. interest exchange.
Swap is the interest paid on loans given by the trade in exchange for the currency pair it currently holds. This is also known as carry trade.
Still having trouble understanding the basic techniques of Forex trading?
Don’t worry if you find it difficult to understand the tutorial or basic trading techniques, it’s not because you don’t understand the forex market. To make it easier for you to become an experienced trader, join the trader community at the GIC Telegram Forex Academy, which will provide information and trading training that is often stored in GIC.
You can also join our GICtrade Telegram trading community to ask fellow traders directly about their trading experiences. You can also follow GIC Instagram to stay updated on webinars and other exciting prizes. In addition, on GIC YouTube, traders can also learn how to trade for free!
So what are you waiting for? More complete features to fully assist you in starting investing and trading in the Forex market through GIC. Make transactions easier, safer, and more profitable. Start by creating a demo account.