What Type of Forex Trader Are You?

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Reviewed by James Stanley, Nov. 24, 2021

There are many forms of foreign exchange merchants, and every calls for a distinct strategy. Whether you select the fast-paced dash of day buying and sellingor the extended marathon of place buying and selling, deciding on the correct fashion for you’ll maximize your probability of success. Read on to be taught extra in regards to the forms of foreign exchange merchants energetic on the earth’s largest market.

The six totally different foreign exchange dealer sorts

Forex merchants have a tendency to suit into one of many following six buying and selling sorts: scalper, day dealer, swing dealer, place dealer, algorithmic dealer, and event-driven dealer. Take our DNA FX Quiz to search out out which kind is most suited to you! Also, learn in regards to the separate sorts under and uncover the character traits which are optimum for every.

1. Scalper

Scalpers are short-term merchants specializing in holding positions for timeframes as small as a couple of seconds to a couple minutes. Forex scalping methods contain buying and selling often all through the day, with the intention of attaining small positive factors on the busiest (most liquid) occasions.

Scalpers dwell life within the quick lane. Continuously confronted with processing new data and reacting to speedy market modifications, you’ll ideally be observant, instinctive and quick-witted – however stoical beneath stress.

2. Day Trader

Day merchants additionally execute frequent trades on an intraday timeframe. While their routine is not going to be as fast-paced as a scalper’s, day merchants will equally shut all positions earlier than the tip of the buying and selling day, in order to not maintain any in a single day. This means trades are usually not affected by destructive information that may hit costs earlier than the market opens or after it closes.

To achieve success as a day dealer, you’ll should be able to adapt to fast modifications in worth, in addition to be cognizant of strategies necessary to this fashion of buying and selling, resembling fading the hole.

The under is an instance of a five-minute chart utilized by scalpers and day merchants, displaying typical day buying and selling entry and exit factors. These factors are primarily based on Relative Strength Index (RSI) indicators, with the oversold and overbought areas circled on the chart.

3. Swing Trader

Swing merchants maintain onto trades for longer than a single day, and as much as maybe a few weeks. Over this quick timeframe, swing merchants will usually favor technical evaluation over fundamentals, though they need to nonetheless be attuned to the information occasions that may set off volatility.

This dealer sort is much less frantic than scalpers and day merchants, so excessive alertness is much less of a requirement, however you’ll nonetheless requires a powerful eye for element in terms of chart evaluation. Find out extra on the right way to determine and commerce market swings.

4. Position Trader

Position merchants maintain trades for longer intervals of time, from a number of weeks to years. As the longest holding interval amongst buying and selling types, place merchants are much less desirous about an asset’s short-term worth fluctuations and extra involved, naturally, with the efficiency over extra sustained timeframes.

As a foreign exchange place dealer, you’ll require endurance as your cash will typically be locked up for very long time intervals. Particularly with longer-term trades, an intensive information of basic elements is useful, so superior analytical abilities will serve you properly.

Below is an instance of a day by day chart usually utilized by a place dealer, displaying a protracted place and an exit round a month later, once more primarily based on RSI indicators circled on the chart. While the timeframe is day by day, place merchants will even typically scale all the way down to shorter timeframes to select tendencies.

FTSE 100 chart position trading style

5. Algorithmic Trader

Algorithmic merchants depend on laptop applications to put trades for them at the absolute best costs. Traders can use outlined directions, or high-frequency buying and selling algorithms, to both code the applications themselves, or buy present merchandise.

This sort of buying and selling fits people who find themselves snug with utilizing expertise and wish to apply it of their foreign exchange profession. Given the character of the applications, algorithmic merchants will even have a eager eye for the technical charts.

6. Event-driven Trader

Event-driven merchants look to basic evaluation over technical charts to tell their choices. They’ll search to learn from spikes brought on by political or financial occasions, resembling Non-Farm Payroll information, GDP, employment figures, and elections.

This sort of buying and selling will go well with an individual who likes to maintain up with world information, and who will perceive how occasions can affect markets. Inquisitive, curious and forward-thinking, you may be expert at processing new data and predicting how world and localized occasions could play out.

The chart under exhibits how the Non-Farm Payroll can present a possibility for an event-driven dealer, utilizing the widespread technique of getting into lengthy when the worth breaks above the trendline of a pullback.

USD/JPY chart event trading style

Different forms of foreign exchange dealer summarized

Forex Trader Type

Time in Trade

Personality Traits

Scalper & Day Trader

1 min-1 day

Observant, Instinctive, Quick Witted

Swing Trader

2-6 days

Calm, Selective, Focused

Position Trader


Patient, Systematic, Strategic

Algorithmic Trader

All timeframes

Tech-savvy, Technical, Mathematical

Event-driven Trader

All timeframes

Inquisitive, Analytical, Forward-Thinking

Can you modify your foreign currency trading fashion?

No foreign currency trading fashion want be static and there may be each risk yours can change. You could also be a scalper confused by short-term worth motionand in search of the free time present in place buying and selling. Or, you might be a technical swing dealer who desires to be taught extra in regards to the fundamentals of the events-driven strategy.

Whatever your fashion or objectives, there may be all the time a approach to develop and develop, and check your talent on the markets in new methods.

Further studying to decode your dealer sort

For extra data on figuring out your perfect buying and selling fashion, in addition to the right way to handle the ups and downs of foreign currency trading, check out the next:

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