4 Types of Traders in Forex Trading

4 Types of Traders in Forex Trading - The personality of a person must be different from one another. Likewise with a trader when trading. In the world of forex trading, several types of traders have different trading styles.

4 Types of Traders in Forex Trading

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Learn about the types of traders in forex trading

In the world of forex trading in general there are four types of traders, namely speculators, day traders, position traders, and swing traders. This type of trader is characterized by a risk profile, trading frequency, and target location when entering the market. Well, since the trading frequency and target positions are not the same, they generally use different time frames, risk management, and trading systems.


This difference is usually due to differences in the personality and circumstances of the Traders, as the Trader may be a student who tends to have more time, a full-time worker who cannot monitor prices much, or he may be an independent worker, and so on. . For this reason, Trading has a different strategy.


The more often a forex trader makes transactions, the higher the risk opportunities and the more trained his trading skills are. The trading style of each type of trader has the same goal, which is to make consistent profits most simply and conveniently for traders to do. Take a look at the following four types of traders and which one suits you best?


Scalper Trader

Scalper trader is the term given to traders who use speculative techniques. The frequency of speculators trades more often than other trades because the trades hold positions in a very short time, i.e. from seconds to minutes. Short trades with high frequency and small profit targets. Within an hour, Traders can frequently open and close positions.


This strategy can be applied if the trade has a lot of flexible time although the risk tends to be higher as the linear saw odds also increase. What is a leather saw? Whipsaw is when the price suddenly and unexpectedly moves in the opposite direction. In addition, transaction commissions are also more wasteful.

 

Usually, the profit target in this strategy is 1-10 pips per transaction. This type of trader generally relies on 1-5 minute charts. It is better to apply a speculative strategy when the American and European markets are open, i.e. when there are price fluctuations. Here are a few things that an exploiter should look out for.


Spread size

Choose a currency pair with a close spread. Avoid pairs with large spreads as the risks outweigh the rewards. Examples of currency pairs with small spreads are EUR/USD, USD/JPY, and GBP/USD. In addition, this currency has high liquidity.


Increase financial level

Because the scalping strategy has a high trading rate with a small profit target in a short time, the leverage used is also high so that it can generate larger profits on a percentage basis.


Day Traders

Day traders are traders who make trading transactions in one day. Trading transactions are completed before the close of trade both losses and profits. The time required for a single transaction ranges from minutes to hours. Traders feel at ease if they go through closing positions without holding positions to avoid news surprises that can disrupt prices.


Usually, the day trader’s profit target is 20-40 pips, depending on the currency pair purchased. The choice of a currency pair to trade is the same as a speculator’s choice, a currency pair must be volatile in a short period.


Meanwhile, to monitor price movements, 15-minute and 30-minute charts are used. Unlike speculators who avoid the news, day traders look to economic news that can move the market further. Day trading is also known as Day trading.


Swing Traders

Swing traders are traders who trade starting from a few days but less than a week. Traders who work full time or who have limited trading time are suitable for using the swing trading style.


In volatile currency pairs, swing traders can set a profit target of 50-150 pips or more. The chart is used as a guide for 1-hour and 4-hour transactions.

 

Strategically, swing traders tend to be more conservative than speculators and day traders. Before moving forward, swing traders review several parameters for confirmation. So they are not affected by price movements in the intraday range.


They focus more on mid-term trends. Because the profit target is bigger, swing traders are not affected by currency fluctuations and wide spreads. Here are some of the advantages of a swing trade:


less risk

Swing traders have a lower trading frequency than speculators and day traders. Opportunity also avoids common mistakes and avoids price movements ga intraday which usually outperform day traders.


saving time

This type of trader strategy can be applied to traders who are busy and have little time to trade so that traders do not need to constantly monitor price movements.


Opening the lid of the chart can certainly distract from the focus of the work and become ineffective. This feature allows swing traders to trade while still being productive in their field. In addition, watching too many charts can “tempt” Traders to engage in unprofitable deals.


Swing traders are generally carried out by individuals who have no formal basis for Economist trading. With limited time, he also doesn’t have time to follow economic news and do fundamental and other analyses. So swing traders rely on technical analysis and use it as a trading guide.


Technical analysis is believed to be effective in reflecting various current market conditions through statistical parameters.


Position Traders

A position trader is a type of trader who makes transactions by holding positions ranging from a few weeks to several months. In terms of timeframe, the trader’s position is the longest compared to other types of traders. Their trading style is the opposite of that of speculators who want to be fast.


If swing traders are guided by technical analysis, then they are guided by fundamental analysis with standard economic data. Even if you use a little technical analysis, trade positions using daily, weekly, and even monthly periods.


Target profit per transaction can be up to 500 pips. One of the advantages of this strategy is that it saves time so that you can stay focused on your activities without constantly monitoring prices, because you rarely trade, of course, transaction costs are also very minimal and you can even get a chance to make a profit. interest exchange.


Swap is the interest paid on a loan that Trading provides in exchange for the currency pair he currently owns. This is also known as a carry trade.


Still, having trouble understanding the basic forex trading techniques?

No need to worry, if you find it difficult to understand educational materials or basic trading techniques, it’s not because you can’t understand the forex market. To make it easier for you in the process of becoming an expert trader, join the trader community on Telegram GIC Forex Academy which will provide trading information and education that is often stored by GIC.


You can also join our GICtrade Telegram Trading community to directly ask fellow Traders about their trading experience. You can also follow GIC’s Instagram for webinar information and other interesting prizes. In addition, on YouTube GIC, traders can also learn to trade for free!


What are you waiting for? More complete features that fully support you to start investing and forex trading through GIC. Make transactions simpler, safer, and more profitable. Start by creating a demo account.

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