Finding the best trading method according to your personality
The personalities of the retail traders vary greatly. Based on their personality, they should choose their trading style. The chances of securing profitable trades will be exponentially high when the traders truly sync themselves with the trading system. Based on the selection of the timeframe, holding period, and trade frequency, we can divide the traders into six major groups.
In this article, we are going to discuss these six different trading styles as they will help us to pick our preferred trading method.
Scalpers are a short-term trader who holds their trading position for a small timeframe, such as for few minutes or few seconds. This scalping strategy consists of frequent trading throughout the day to gain more at the busiest times. At the fast lane, scalpers live their life. The scalpers react to the swift changes in the market to gain more profit. Moreover, scalpers deal with processing new information.
If we keep a trade open for more than 24 hours or use the key swings of the market, we may call that trading process a swing trading strategy. At times, swing traders hold on to their trades for a couple of weeks. So, to keep pace with the changes in the economy, swing traders always evaluate the news factors in the market. Click here to learn more about swing trading strategy. Once you know the ins and out of this trading edge, you will feel more confident in this strategy. But after going through the details, if you think the trading process is complex, it is better to rely on a different trading technique.
On an intraday timeframe, day traders carry out frequent trades. However, the routine of this type of trader is not the same as the fast-paced scalpers. In the same way, the day trader will close all the positions before the trading day ending and don’t hold them overnight. It means the negative news doesn’t affect the business, hitting the market prices before opening the market or closing it. Remember, a successful day trader can adapt to the quick price changes, and they need to be cognizant.
Algorithmic traders, place their trades with the help of a computer program. The traders can purchase such software to ease the overall process of trading. Moreover, they can code the programs using high-frequency trading algorithms. Furthermore, they can use the defined instructions to buy products or code the program.
People who are technology experts and comfortable using this technology should adopt this algorithmic trading, and in their Forex career, they can apply it. Given the program nature, the technical charts are significant for the algorithmic merchants, and they have a keen eye on the charts.
Position trader holds trade for several weeks to many years, and they have the transactions for more extended periods. They are usually more skilled and intend to take advantage of the long-term price movement in the major currency pairs. They do not have any claim to assess the short-term price fluctuations. They are naturally more concerned with sustained timeframes performance.
A Forex position trader mostly requires patience because, for a long time, their money can lock up in the business. Mainly, a thorough fundamental factors knowledge is beneficial for the longer-term trades, and you will get better benefit from the advanced analytical skills.
This type of trader takes their decisions by looking into the technical charts and doing a deep fundamental analysis. Different economic and political events create spikes and provide unique profit-taking opportunities to event-driven traders. They seek the benefit from those spikes such as GDP, Non-Farm Payroll, elections, employment figures, etc.
Moreover, this type of dealing suits a person who will get the point of events impact on the market. Curious, interested, and forward-thinking people are more likely experts at new information processing, and they can better predict the impact of a given event.