Understanding 4 Types of Traders in Forex Trading
Understanding the Four Types of Traders In Forex trading - Forex - a person's personalities should be different from each other. It is the same with a trader when trading. In the world of forex trading, there are several types of traders who follow different trading styles.
Learn about the types of traders when trading forex. In general, there are four types of traders in the forex trading world: speculators, day traders, position traders and swing traders. This type of trader is characterized by a risk profile, trading frequency and target position when entering the market. Well, since the frequency of trading and target positions are not the same, they usually use different time frames, risk management and trading systems.
This difference usually arises from differences in the personality and circumstances of traders, where a trader may be a student who tends to have more time, a full-time worker who cannot keep track of prices a lot, or he may be an independent worker. and soon. ... For this reason, trade with a different strategy.
Scalper trader is a term for traders who use speculative methods. The frequency of speculators' deals is higher than that of other deals, because the deal holds the position for a very short time, from seconds to minutes. Short trades with high frequency and low profit targets. During the hour, traders can often open and close positions.
This strategy can be applied if the trade has more flexibility, although the risks are generally higher and the line odds also increase. What is a leather saw? Whipsaw is when the price suddenly and unexpectedly moves in the opposite direction. Plus, transaction fees are much more wasteful.
Typically, the profit target in this strategy is 1-10 pips per transaction. This type of trader usually relies on charts for 1 to 5 minutes. The speculative strategy is best used when the American and European markets are open, that is, when there are price fluctuations. Here are some things a scalper should pay attention to.
Spread size Select a currency pair with a tight spread. Avoid pairs with large spreads as the risks outweigh the rewards. Examples of currency pairs with small spreads: EUR / USD, USD / JPY and GBP / USD. Moreover, this currency has high liquidity.
raise the financial level
Since the scalping strategy has a high trading speed with a small profit target in a short time, the leverage used is also high so that it can generate a large profit on an interest basis.
2. Traders of the day
Day traders are traders who enter trades in one day. Trading operations are completed before the trade is closed with both a loss and a profit. The time required for a single transaction ranges from minutes to hours. Traders feel comfortable if they close positions without holding them in order to avoid news surprises that could disrupt prices.
Usually the target of a day trader is 20-40 pips, depending on the purchased currency pair. The selection of currency pairs to trade is similar to the selection of speculators, currency pairs must be volatile for a short period of time.
Meanwhile, 15-minute and 30-minute charts are used to track price movements. Unlike speculators who avoid news, day traders pay attention to economic news that can move the market further. Day trading is also known as day trading.
3. Swing traders
Swing traders are traders who start trading in a few days, but in less than a week. Traders who work full-time or who have limited trading hours are suitable swing trading styles.
In volatile currency pairs, swing traders can set a profit target of 50-150 pips or more. The chart is used as a guideline for 1-hour and 4-hour trades.
From a strategic point of view, swing traders tend to be more conservative than speculators and day traders. Swing traders check several parameters for confirmation before moving forward. Thus, they are not affected by price movements in the intraday range.
They are more focused on medium-term trends. Since the profit target is larger, swing traders are not exposed to currency fluctuations and wide spreads. Here are some of the benefits of swing trading:
Less risky swing traders trade less frequently than speculators and day traders. Opportunity also avoids common mistakes and intraday price movements.
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