Forex Traders and How to Know What Type You Are

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When managing trading capital, a lot comes to mind. Trading success or failure largely depends on the trading strategy, experience, and temperament of the trader.

In this article, I will explain the different types of traders, their trading strategies, and what character traits makes one succeed or fail when trading even the best currency pairs.

forex traders react to the market in four distinct ways…

1. Market behavior

2. Trading style

3. Trading strategies

4. Trading psychology

Let’s examine how traders are influenced by the behavior of the market.

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Type of Traders by Market Behavior

1. Madcap – act spontaneously and not thoughtfully, make bullish trade deals, they most times make profits, but losses for Madcaps can be disastrous due to excessive risk-taking.

2. Pigs – are similar to Madcaps, they want to take all the profits by holding positions for so long. They tend to constantly take risks and make emotional trades contrary to their strategy sometimes. From time to time they manage to make good money, but in most cases, the “pig” leaves with nothing.

3. Chary – are overly cautious and fear taking risks that could put them in uncomfortable positions. This attitude works for them in markets or currency pairs they understand. Chary are not comfortable in very volatile markets. They lose money sometimes due to indecision, missing profitable entry points.

4. Whales – are bullish and big market players, they could be institutions or high net worth individuals (HNIs) who tend to control the market with their capital. They are market-makers and could be manipulative as well, influencing market sentiments in their favor.

Key Takeaways

📌 Every trader exhibit these trading traits, however some traits are more dominant than others.

📌 Traders should strike a balance between the bull and the bear to avoid being overly greedy or being indecisive.

📌 Emotional trading could hinder trading success and could result in blowing capital. Sticking to a strategy works while considering a little flexibility at some point.

SEE ALSO: A Precise Answer to Leverage in Forex Trading

SEE ALSO: Breakout in Forex Trading Simplified

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Different Trading Styles

type of Forex Traders

1. Scalping

Intraday speculative strategy, the meaning of which is to conclude many transactions in very short time intervals.

Scalpers have to spend several hours a day at the monitor, looking for good deals.

To become a scalper, you need a lightning-fast reaction, perseverance and concentration, as well as a lot of free time and nerves.

Peculiarities

  • Selection of the most liquid instruments, the most volatile pairs are needed, giving a great opportunity to open trades;
  • Trading is conducted primarily during overlapping sessions during the hottest market hours.

2. Day Trading

Intraday strategy, which provides for the closure of all positions by the end of the day without carrying them overnight.

It differs from scalping in a smaller number of transactions and their longer duration.

Well suited for those who have free time to analyze and track transactions, but do not want to monitor open positions every minute.

Peculiarities

  • It is necessary to periodically monitor open positions;
  • Tracking economic statistics.

3. Medium and Long-Term Trading

A strategy in which deals are opened for days, weeks, months and even years.

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This type of trading requires tremendous patience and calmness. An absolute plus is time.

You don’t need to look at the chart all the time and take into account local news.

Peculiarities

  • Large stop orders for holding out price movements against the trade, which also implies a considerable size of the deposit;
  • Minimum time spent on trading;
  • A profit/loss target of several hundred/thousand points.

Trading Psychology

1. Intuitive: Makes decisions, following his intuition, independently assessing the situation and not being guided by someone else’s opinion.

2. Intellectual: When making a decision, he uses fundamental / technical analysis, is able to assess the situation and draw the correct conclusion.

3. Instinctive: Follow your instincts. Make decisions in a fit of emotion, looking at fluctuations in the schedule or “jumping on a departing train.”

SEE ALSO: 6 Psychological Pitfalls of Trading the Forex Market

Trading Strategies

Learning to trade is not easy, especially when it comes to the Forex market. You will probably have to learn it through a Forex trading system. Some people think that traders are the top of all trading strategies, but that’s not the way things work.

The key to successful trading is to become the master of some trading strategies. These few trading strategies can take you far.

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Forex strategy trader systems are widely used by various people because they provide them with structure, a set of rules, and a plan to follow as well.

There are certain strategies that are currently used in the Forex market and they may even make you choose which Forex strategy trader would be best for you to survive in this market.

1. Indicator Driving Systems

These trade agreements are designed by those who consider that a particular configuration is working at the moment but using this system requires prudent treatment.

That’s because it just works for the present moment. This Forex trading system cannot support you for a long time.

The system uses indicators to generate a trade signal against price action. Indicators are always lagging and therefore tend to give late and false signals.

They are not updated in any case. The great thing about this trading deal is that you look at the charts and many hobbyist traders find it useful and tempting. They find it easy to use and understand.

2. Harmonic Trading Systems

This trading system recognizes price patterns with Fibonacci extensions as well as replacement information and then calculates the turning points in the markets.

It is a complex form of trading that will require significant practice. If you master it through practice, you will find it among the best trading systems, as it can offer higher returns against risk. You can use it to trade in any type of market.

3. Technical Trading Systems

These are one of the most widely used trading agreements that are common among Forex traders. They include rising triangles, flag patterns, shoulder patterns, heads, and a host of other patterns to allow you to trade the markets.

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These trading systems are really workable and it uses financial data from previous years to predict market trends and make a move.

Forex strategy trader or Forex trading systems allow you to make sure you don’t lose while trading from the comfort of your home.

However, make sure that Forex trading systems are not guides to making money.

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You still have to use your personal knowledge in trading and gather a lot of trading information to invest your money in the right place. Trading is not everyone’s cup of tea.

If you think that by using trade agreements you can ensure that you make large sums of money, then you may be wrong.

You will have to use your experience and practical knowledge to ensure that the Forex strategy trader you use proves that it will guide you in the profitable trading.

SEE ALSO: Support and Resistance in Forex Trading – Simplified

Frequently Asked Questions (FAQ)

1. How Much do Forex Traders Make a Day?

With a $5000 account, you can risk up to $50 per trade, and therefore you can reasonably make an average profit of $100+ per day.

2. Can You Start Forex for Free?

You don’t actually need any money at all to begin forex trading – if you are completely new to forex and want to find out if it is for you then you can start for free using a demo account where you will trade with virtual money. For day trading in forex, there is no legal minimum amount required.

3. Should I Trade Forex or Options?

The liquidity in Foreign Currency Trading (Forex) far surpasses that in the Options Market. This means when it comes time to trade, Forex Trades will be filled much easier than Options trades will. This speed means more potential profit. Online Forex Trading can give you better leverage than playing Options.

Final Thoughts

Knowing what type of trader you are is essential to understanding how you trade and the results that come with your style of trading.

It is important that you gather a lot of personal knowledge regarding trading so that you invest your money in the right place.

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