In the forex industry, there are many kinds of traders who trade to earn a good profit. Forex offers unlimited financial opportunities if you can utilize them wisely and skillfully. However, when you are trying and testing out different strategies during your demo trading, as we have mentioned in our previous blog, How Long to Learn Forex Trading, you eventually feel comfortable with a few particular kinds of strategies. And you must test these strategies on your real invested account to see if they are effective or not. Then you can successfully identify what kind of forex trader you are.
Among the many kinds of traders, these are the ones that you will see frequently in different trading communities.
- Day trader
- Swing trader
- Position Trader
- News Traders
This is one of the most interesting kinds of traders in the market. Scalpers hold their trades for a maximum of 10 minutes to an hour, setting positions with a large lot and taking big risks to earn the most profit from a small movement in the market. You do not need the whole day to sit in front of the computer and analyse the market as it moves every second of the day. Rather, scalpers focus on the most volatile periods, like news time, market opening, or the overlapped sessions where a large amount of liquidity is created. Scalping is a safe way to lose less of your invested money, and taking multiples during the volatile period makes it easier to earn a lot from multiple small trades.
Day trading means holding the trade position for a couple of hours, but not overnight. In the forex market, you can find Day Traders the most as it ensures great profit if you are a skilled one. As a Day Trader, you must know the market very well, from fundamental analysis to technical analysis. Everything should be in your grasp to take the most profit out of the market.
Day Traders also focus on the volatile periods of the market, like news time, market opening, or the overlapped sessions. Moreover, they trade in the nonvolatile market and in exotic pairs as well.
Maintaining very strict risk management and a moderate lot size depending on the market status, currency pairs, and the economic calendar, you can profit a lot from day trading. Day trading is the idealised version of a trade that everyone must be trained to become.
Swing traders are the ones who hold their positions overnight and over the weekend. Comparatively, this is quite a risky move, as you can’t predict what news during the weekend may hamper the market. As a swing trader, you must have a good amount of confidence in your positioning, which we think only comes from experience and technical knowledge. However, theoretical knowledge of the forex market will never help because the US President’s one word can destroy swing traders’ full plans.
These kinds of traders hold their positions for weeks, months, or even years. They are mostly skilled at the fundamental analysis of trading and follow the predominant factors of market movements. You can become a Position Trader as a part-time job, but for a longer investment.
This is undoubtedly the most skilled and brilliant kind of trader in the world. These traders always focus on the news hours by thoroughly analysing the global updates, the daily economic calendar, and the immediate and impactful news releases. During a political or economic news release, the market becomes extremely volatile, causing great liquidity in the market. That is the prime time for the News Traders to trade and get the most profit out of the market. News Traders execute a mixture of scalping, day trading, and swing trading. They are among the most experienced risk-takers among traders.
So here are most of the traders’ classifications and a brief description of their trading characteristics.
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