There are different type of traders?
Trader’s job it just trading, why there are categories for trader?
Actually…the traders are categorized by the style of trading and also the period of open position of their trades.
When you understand the style of trading of these traders have, you can find out the type of trading style that suits you the most.
With a suitable trading style, you can perform better in your trading journey.
It’s like jogging or running, everyone has that own pace.
The things you need to do in trading is to find out your trading pace.
Below are the type of traders with their characteristics.
After this post, I’m sure you can find out what type of trader you want to be and the one that suits you the most.
Scalper is a trader who to take many small profits from the market consistently throughout the trading days.
The trades they opened are normally closed in seconds or minutes.
So, the Scalper will normally open more than 10 trades in a day.
The Scalper will use the 1 minutes and 5 minutes time-frame chart in their trading.
They Scalp a very small amount of pips in every of their trade.
The aim of a Scalper is to profit a small amount in every trades and trade as much as possible according to their trading strategy.
To become a Scalper is mean by you have to require a high level of trading skillset and a very strong Trading Psychology.
Everything happens very fast in the Scalping process.
Because of fast cash can be earned from scalping.
Many of the gambler is trade like a scalper.
They want to earn a big profit from the market fast and they always trade with oversizing trades.
This causes any people losing their money.
More importantly, they enjoy the excitement from the gambling process.
The biggest mistake done by these people is they do not take time to educate themselves.
If you are a beginner in trading, I will NOT encourage you to start as a Scalper.
You need to learn from the basics of trading and develop the correct trading behavior.
#2 Day Trader
Day Traders placed and closed their trades within a day. They do not carry their trades to the next day.
That’s why we call it a “Day” Trader.
They are normally looking at the minute time frame above 1 minutes and 5 minutes.
In day trading, the news or announcement of the countries need to be taken into account.
It is because the fluctuation of the price after or before the announcement has a high possibility to wash out your trade easily before it hit the profit taking level.
If you are a purely technical trader, this is the item you need to watch out for.
In the Day trading process, it requires a trader to aim for the right timing to enter the market based on the signal from the reader’s strategy.
In these days, there are many people started to learn day trading because they wanted to become rich quick.
There are also many articles and Youtube videos that teach the outsiders or beginner to start day trading.
But many of them lose money and quit trading because of getting losses in the first few weeks or months after they start to trade in the market.
To Become a Day Trader not only need to have a profitable trading strategy.
The trader also need to have the correct mindset and risk management skill in trading. These skills take time to develop and sharpen.
If you are a new trader, you can start to Day Trade using demo accounts to test out your trading strategy and develop your trading psychology strength.
If you feel that Day Trading is exhausted for you, then I think you are more suitable to become a….
#3 Swing Trader
The trading time frame used by Swing Traders are normally hourly or day time frame.
They normally will hold a trade about 3 to 7 days.
The benefit of trading like a Swing Trader is you will have enough time to analyze and plan for your trade.
The timing of entering the market will be more loosen.
It is because the price movement in the larger time frame is just a minor movement compared with the minutes time frame chart.
Diagram above shows the right chat’s time frame is bigger than the time frame in the left chart.
E.g. there is an example for this situation, which is the movement speed of an old man and a superhero that moves very fast (like the QuickSilver, Flash or Superman).
The old man is act as the trader using smaller time frame chart and the superhero is act as the trader using bigger time frame chart.
When the superhero moves, he will feel that the things beside him is moving in the slow mode while the old man will feel very things is moving so fast.
But actually the speed of other things didn’t change at all.
If you have a full-time job or you are very busy with your study, it is advisable for you to choose to be a Swing Trader than the Scalper or a Day Trader.
It allows you to have enough time to analyze the chart if you use a bigger time frame chart.
After you have passed the basic learning curve of trading, you will just need to spend less than a couple hours per day on the chart.
Where this is the main difference in time management compared to Scalper and Day Trader.
Other than that, Swing Trading will not drain a lot of your energy as the Scalping and Day Trading do.
For the people who are very interested in trading, but really don’t have the time to view the chart daily, you can try to trade as a…
#4 Position Trader
Position trader hold their trades for weeks or months. Some of the Position Trader even hold their trades over a year.
They normally will trade using the days or weeks time-frame chart.
In the position trading, the trades placed may not be affected by the fluctuation of the price.
Because the price movement is moved by the economics of the countries.
This means that the Technical Analysis is less important in the position trading than the Fundamental Analysis.
Thus, this is meant by the main focus of Position Trading is on the major trend of the price movement.
And of course, the major movement of the price is causing by the major fundamental factor of the countries and the people that react to the changes.
For the Position trader, they are like the swing trader, they don’t have to look at the chart all the time.
The Position Trader even analyze the chart lesser than the Swing Trader.
The disadvantage of Position Trading is you need to have a certain amount of capital to be placed in the trade and this may cause your capital have a lower liquidity.
Choosing The Trading Style That Suits You
For The Beginners
As you can see from the type of traders above, #1 to #4, you can differentiate them in terms of pace of trading.
Being a Scalper and Day Trader require certain amount of knowledge and mental strength.
Because of these reasons, a beginner in trading is not encouraged to start trading like a Scalper or a Day Trader.
If you choose the Scalping or Day Trading at the beginning of you trading journey, it is like choosing the HARD Mode in the game you never played before.
Furthermore, you will have very high difficulty to analyze the market with a fast paced when you just start to trade.
So, it is better to start with Swing Trading or Position Trading. Learn the basic of trading first and apply the things you learn over and over again.
For Your Personality
The different type of traders also can mean by different type of trading style.
As a trader, you will need to find out what is the trading style that suits your personality.
When you find your own trading style, trading will become a smoother activity for you.
If the trading style that does not suit you, you will have a higher psychological pressure in your trading journey.
For The Part-Time Traders
Day trading are suitable for the trader who trade for full-time.
A trader also has to have enough experience and skills to be a day trader.
Forex is the market that can let you to have this option.
Because it is open 24 hours a day for the weekdays.
If you are working or studying and wanted to become a full-time trader, then you can start to be a part-time trader like me!
Become a Swing Trader.
The benefit of becoming a part-time trader (Swing Trader) is it gives you a lot of time to do the things you want, including doing the job you are currently doing.
If the profit from your part-time trading is enough to cover your expenses, imagine the time freedom you will have after you quit your job.
The most important key to the traders to trade part-time is to build and grow their capital at the same time.
For The Experienced Traders
For a trader that having enough experience in Swing Trading or Position Trading,
in my opinion,
you can try to trade with a smaller time frame to train your ability-to-act with the market.
It can improve your decision making skills in trading.
Besides, it also can expand your comfort zone in trading.
When you trade with smaller time frame you will realize that you emotional changes is different than trading with the time-frame you usually used.
It is a way to learn more about yourself.
After the post above, you already know that there are 4 different type of traders.
Choosing the right trading style for yourself is an important thing for you to profit long-term in the market.
Your experience and knowledge about trading also an important factor in choosing the trading style.
There are also traders who having mixing the trading style and not solely using just one trading style. E.g. a trader can be a Day Trader and also a Swing Trader.
Take your time to test for the different type of style and find the one suit you the best.
Thanks for spending your precious time together.
Let us grow and learn together.