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Types of Forex Traders: Scalpers, Day Traders, Swing Traders and Position Trading

 

There are different types of Forex traders. The type of a Forex trader one is depends on the amount of time that they hold their currency transactions.

 

The different types of currency traders also use different chart time-frames to place their trades.

The different types of Forex currency traders are:

  1. Scalpers
  2. Day traders
  3. Swing traders
  4. Position traders

Each type of Forex currency trader is explained below and as a beginner foreign exchange trader you can decide which type of  Forex trader you want to be based on your trading personality and the chart time frame that you would want to be trading with.

 

Scalpers

The Forex traders who are scalpers hold on to their trades for only a few minutes. With the objective of making a small amount of pips in profit, 5 to 10 to 20 pips.

 

Scalpers are the type of FX traders that make many transactions in one day and participate in Forex trading during the busiest times of the market. A scalper can open anywhere between 30 to 50 trades per day.

 

Scalpers are Forex traders that can make quick decisions.

 

Scalpers use 1 minute charts to put their orders. They use 5 minutes Forex chart time frame to determine the trend, if the trend is going up or down and to decide their entry and exit.

 

Scalper 5 minutes time-frame strategy

A Scalper using 1 minute Forex trading chart time frame wants to go long, checks 5 minute chart, looks like the example below, since it shows the trend is going up, the scalper will then decide its okay to buy the currency pair.

Scalper multiple time-frame Forex trading strategy

Types of Foreign Exchange Traders - Scalpers

 

Day Traders

This type of FX trader holds on to their trades for a few hours but not more than a day. With the objective of making quite a number of pips in profit, 30 to 70 pips.

 

The day trader makes 2 or 5 transactions in one day, participating during the busiest times of the market and they do not hold their orders overnight.

 

These FX traders use the 15minutes Forex charts to put their orders. They use 1 hour chart to determine the market trend, if it going up or down and to decide their entry and exit.

 

Day Trader 1 Hour time-frame strategy

A Forex day trader using 15 minutes forex chart wants to go long, checks 1 hour time frame, it looks like the example below, since it shows the market trend is going up, they will then decide its okay to buy the currency pair.

Day Traders multiple time-frame Forex trading strategy

Types of Forex Market Traders - Day Traders


Swing Traders

This type of trader holds on to their Forex trades for a few days to a week - With the objective of making a large number of pips in profit, 100 to 400 pips.

 

This type of Forex market trader makes an average of 2 to 5 transactions in one week, holding onto them overnight. Swing method requires currency traders who are patient.

 

This type of currency trader uses the 1 hour Forex charts to put their orders. They use 4 hour chart to determine the Forex trend, if it is going up or down and to decide their entry and exit.

 

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Swing Trader 4 Hour time-frame strategy

A swing trader using 1 hour candlestick charts wants to go short, checks 4 hour candlestick chart, it looks like the example below, since it shows the trend is going down, they will then decide its okay to Sell/Short the currency pair.

Day Traders multiple time-frame Forex trading strategy

Types of Foreign Currency Traders - Swing traders

 

Position Traders

This type of foreign currency trader holds on to their transaction for weeks or months. With the objective of making a large number of pips, 300 to 1000 pips.

 

They place an average of 2 to 5 orders in a year, position trading  method requires those who are patient, experienced and have huge account balances that can withstand huge draw-downs.

 

These FX traders use 1 day or weekly charts to put their orders. They use weekly chart to determine the trend, if it going up or down and to decide their entry and exit.

 

Position Trader Weekly time-frame strategy

Position trader using the daily candlesticks charts wants to go short, checks weekly chart time frame, it looks like the example below, since it shows the trend is going down, the position trader will then decide it is okay to short.

Position trader multiple time-frame trading strategy

Types of Foreign Exchange Traders - Position Traders


What is the best Forex trader type?

The most profitable type of Forex trader or the best Forex trader type is the day trader and scalper depending on the method of trading of each trader, but these two methods are the most widely chosen methods. Scalping and requires those that can make quick decisions while day trading is for those who want their trades to run for longer and have more time when making trading decisions. When starting its best to try scalping or day trading. This methods are the best because you do not leave orders open for too long. At the same time you do not leave trades open overnight and you can trade when you have time to watch the market movements. In Forex it is best keep orders open for as long as the trend setup is in your direction and exit immediately once the direction starts to reverse.

when it comes to the question about which type of trading style is used by the best Forex traders or the top Forex traders the two trading methods above are the most commonly used trading methods. Forex traders can also automate these scalping or day trading styles by implementing their strategies using automated Forex trading robots.

 

For swing traders, leaving a transactions too long can also take up your profit and this method also requires a lot of skills so it is best to stick to the short term methods for most beginner Forex traders.

 

Position trading is not good it requires a huge account balance and sometime it can result to huge draw-downs.

 

For swing trading and position trading methods, leaving a transaction open for too long, may mean they can reverse and move against you with a lot of pip movements and can even wipe your Forex account, for this reason swing and position methods are not very popular. It is best to stick to scalping and day trading so as to better manage the funds in your Forex trading account.

It is not recommended for the Forex trader who is a beginner to leave orders open overnight, it is best to always close them at the end of the day.

 

Forex News Traders - this foreign currency trader places orders during economic news, either guessing the news will be positive/negative or placing pending orders above and below the market price. News trading method is risky as volatility is massive, whilst liquidity may be non-existent. You may not get filled or, worse, your stop loss might not be honored! News method can be very profitable for some but requires some skills.

 

Forex Robot Traders - the Forex robot trader is the type of trader that uses automated trading programs known as Forex robots to trade the online currency market. This trader will install a Forex trading robot on their trading platform and the trading robot will then open and close trades on behalf of the trader based on the trading strategy that has been used to program this automated Forex robot. If you are new to automated Forex trading and would like to find a Forex trader pro to help you come up with an automated trading robot, then you can find out more about automated trading on the Forex Expert Advisors Article.

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