Types of traders in Forex
- There are many types of Forex traders around the world, but we can focus on the most famous of them, which are 5 types that can be listed in the following detail:
Short Term Trader Scalper
- They are short-term traders who enter and exit trades quickly, often within minutes or even seconds.
- They rely on small price fluctuations to make quick profits.
- They see that brokers live a life full of speed and change. They need to be committed to their work, have strong instincts, a quick wit, and the ability to remain calm under pressure.
- As a scalper trader usually trades on five-minute frames or less, he does not aim for his deals to reach large points, as his deals do not exceed more than 20 to 25 points, as he relies on quick entry and exit from deals.
Day Trader
- Day traders make frequent trades throughout the day, but over longer time periods than short-term speculators as they close all their positions before the end of the trading day to avoid exposure to negative news that could affect prices before the market opens or after it closes.
- Day traders often rely on the analysis of the half-hour and hourly frames, as their goal in their daily deals, which range from two to three daily deals to reach 50 points per day, depends more on technical analysis than on fundamental analysis.
Swing Trader
- Swing traders maintain their trades for longer periods of time than day traders, up to days and extending to weeks within a time frame between the hour, four hours, and daily, and diversify between them. The swing trader relies on technical and fundamental analysis in approximately the same proportion, in order to determine entry and exit points.
- Swing traders are less busy than scalpers and day traders, so they do not need the same intense focus. However, they still need strong chart analysis skills to identify profitable opportunities.
Position Trader
- The investment trader holds his trades for long periods of time, up to months and sometimes years. Since this is the longest holding period among trading styles, position traders focus on the long-term trends of the asset, not short-term fluctuations.
- To be a successful investment trader, you will need patience and advanced analytical skills. Since you are trading on a long time frame, you will need to be able to identify long-term trends and manage your risks carefully.
- Here is an example of a weekly chart for an investment trader, showing a long and exit position after more than two years on USD/JPY as 2021 shows when inflation is high in America but already low in Japan.
Algorithmic Trader
- Algorithmic traders use computer programs to perform transactions automatically, allowing them to achieve the best prices and execute trades quickly.
- Traders can either write their own software or purchase ready-made software such as expert advisors.
- The trader programs the expert according to his needs and sets certain conditions that he wants, and when those conditions are met, the expert activates a deal based on that.
- Algorithmic trading is suitable for people who have strong technical skills and an understanding of the Forex market.
- Paying attention to technical charts is also essential, as algorithmic programs rely on analyzing historical data to make trading decisions.
