There are many types of FOREX traders. So, you need a unique approach when dealing with each. Whether you choose the fast-paced sprint of day trading or the prolonged marathon of position trading, selecting the right style for you will maximize your chances of succeeding.
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There are generally six types of FOREX traders in the foreign exchange market. No matter your trading asset, you must fall within the line.
Looking at the fact that we are FOREX-focused, FOREX traders tend to fit into one of the following six trading types: scalper, day trader, swing trader, position trader, algorithmic trader, and event-driven trader.
1. Scalpers
Scalpers are short-term traders focusing on holding positions for timeframes as small as a few seconds or a few minutes. FOREX scalping strategies involve trading frequently throughout the day, with the intention of achieving small gains at the end of the game.
2. Day Traders
Day traders also execute frequent trades on an intraday timeframe. While their routine will not be as fast-paced as a scalper’s, day traders will similarly close all positions before the end of the trading day, in order not to hold any overnight.
This means trades are not affected by negative news that can hit prices before the market opens or after it closes.
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3. Swing Traders
Swing traders hold onto trades for longer than a day, and perhaps for a couple of weeks. Over this short period, swing traders will typically favor technical analysis over fundamentals, although they should still be attuned to the news events that can trigger volatility.
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4. Position Traders
Position traders hold trades for longer periods of time, ranging from several weeks to years. As the longest holding period among trading styles, position traders are less concerned about an asset’s short-term price fluctuation. They’re more interested in the performance over more sustained time frames.
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5. Algorithmic Traders
Algorithmic traders rely on computer programs to trade for them at the best possible prices. Algo traders as they are called can use defined instructions or high-frequency trading algorithms to either code the programs themselves or purchase existing products.
Suggested Read: Why the FOREX Market is Open 24 Hours a Day, 5 Days a Week
6. Event-driven Traders
Event-driven traders look to fundamental analysis over technical charts to inform their decisions. They’ll seek to benefit from spikes caused by political or economic events, such as Non-Farm Payroll data, GDP, employment figures, and elections.
This type of trading will suit a person who’s up to date with world news, and who will understand how events can impact markets. Inquisitive, curious, and forward-thinking, you will be skilled at processing new information and predicting how global and localized events may play out.
