How to find out what type of forex trader you are
traders fail because they try to follow a strategy that isn’t suited to them. So before you embark on any type of forex trading strategy, you need to decide what type of trader you are.
Use your answers to the following questions to help you build a picture of the type of trader you are:
Are you prepared to learn different techniques for forex trading?
How much time do you have to trade?
What stands in your way of trading?
How focused are you?
How stressed will trading make you?
What are you strengths and weaknesses?
You can now see what type of forex trading will suit you best…
The four main types of forex trader
Scalpers jump in and out the market quickly for gains of up to 10 pips, Max Munroe in Forex Round-Up
explains. To be good at this type of trading, you need to stick to your strategy religiously and be able to stare at your trading screen all day.
With this type of high frequency trading, costs can be a concern. You need to be able to concentrate for long periods of time.
#2: Intraday traders
As the name suggests, this means entering and exiting positions through the day and rarely holding them overnight. You’re looking for gains of between 30 and 80 pips.
For this type of trading, you’ll concentrate on chart patterns and market sentiment. If you work, this type of trading is unlikely to suit you.
#3: Swing traders
Generally, this type of trader is in a position for a couple of days. This means running wider stop losses and profit targets. The key here is to capture large movements in the market, generally over 100 pips.
Swing traders tend to have rules they follow. They run with wider stop losses and profit targets, and are looking for gains of over 100 pips a time.
#4: Position traders
Position traders can be in trades for a number of weeks and may use fundamental analysis to trade. These types of traders are looking to make big gains in each trade.
From looking at the different types of forex traders above, see which one suits you best. Then you can use this information to help you find a strategy that works best for you.
So there you have it, how to work out which type of forex trader you are.
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