Different Type of Traders: Choose Style That Suits You

Thinking of online trading? Want to know about different types of traders to choose the suitable one? Then this article is for you.

Throughout the article, we’ll introduce you to different types of traders and how they trade. Eventually, it can be your first step to becoming a successful trader.

Let’s get started.

What are the Different Types of Traders?

The types of traders are based on how the traders deal with their work. Below some major ones are discussed.

Day traders

First of all, the day traders are extensively aware of the market. And one interesting thing is that they get a short time for a trading session. That is usually less than an hour. It’s evident their trading doesn’t extend to the next day.

Day traders tend to take risks. Their dependence is often on high leverage. That’s why day traders require a good understanding of the market mechanism. Their focus lies in real-time market situations. The slightest price movement in a short while is enough for them to go for the final action.

The nature of the trading makes day traders arrange more liquid instruments like forex, stocks, and futures with short notice or get them managed long before the moment of rush.

Position Traders

This type of traders are more into macro trends. They follow the assets’ potential growth. Position traders are also known as trend followers.

There are different technical and fundamental tools they use to analyze the market until their observing object reaches its peak.

The traders in position trading don’t need to sight the market regularly like day traders. On the other hand, the trading number for yearly is very low in number, let’s say, it doesn’t exceed 10.

Scalp Traders

Scalp traders or scalpers take very little time for trading- a few seconds to a few minutes. Most short-term traders aim to make lots of trades quickly, coming with small profit gains.

The trader receives a significant amount of profits after several daily dealings. Scalpers prefer the major currency pairs more in scalp trading as the deal requires tight spreads.

Scalpers’ operational time is the busiest moment of trading.

Swing Traders

To the traders, swing trading is one of the favorites. The traders of this type apply technical analysis in search of medium-term opportunities. Unlike day trading, this trading needs fewer efforts.

Swing traders go for small and steady returns until the market turns adverse to them. Sometimes, traders also follow fundamental analysis like the day traders do.

The traders wait for the expected move of the price and capture it when it’s time. Swing trading can be a risky deal. Thus, the traders are expected to be calm in any critical situation.

These 4 types of traders are associated with trading in forex. But, the list is not limited. You’ll find more traders.

Intraday Trader

Intraday trading is similar to day trading. The word ‘intraday’ refers to ‘within the day’. Intraday traders get less time for each trading, and they have specialization in instruments regarding buying and selling.

Algorithmic Traders

Algorithmic traders take help from computer programs for trading at the best price. They provide defined instructions for coding the program or purchasing existing products.

The tech-savvy get advantages in algorithmic trading, especially those who want to build a career in Forex. These traders follow the technical charts for their trading.

Event-driven Traders

Fundamental analysis is preferable to the event-driven traders than the technical charts. They are familiar with the current world events and their impacts on the market.

The traders in event-driven trading look for benefits from the spikes, which are the results of the economic and political events such as GDP, elections, employment figures, etc.

Let’s now focus on some traders who perform their trading with the help of different tools.

Fundamental Traders

Fundamental traders study each type of information and global and industrial trends and evaluate the assets. Their main focus is on the individual performance and the assets’ characteristics.

Their decision to sell, buy or avoid trading is quite an information and analysis-based. That includes financial statements, press releases, historical data, analyst reports, etc.

Technical Traders

The traders aim to identify opportunities from indicators they get from the chart they follow. They are often defined as the ‘chartists’.

They are mostly the buyers or sellers in the short term. Technical traders focus on charts, visual patterns, trends, etc., other than quantifying the intrinsic value of the security.

So, it’s clear that the field of focus between the technical traders and fundamental traders are respectively ‘anticipating future’ and ‘past-records’.

Price Action Traders

Price action trading is a particular style of technical trading. The traders in this trading avoid fundamental analysis metrics. Their decisions are based on the actual and recent movements in price.

They try to predict the market’s destination by analyzing the price patterns.

Which Style Should You Choose for Yourself?

Probably you liked at least 2 of the trading styles by the traders here. Even if it’s one, the question arises if that’s the perfect one for you. How can you decide on choosing here?

For that, some questions need answers.

• Are you a newbie or experienced?
• Which instruments do you prefer?
• Do you have control over your emotion in terms of executing your plan?
• Are you risk-averse?
• What is your plan? Gaining profit gradually or chasing big?
• How much capital do you have to begin with?
• Will your study and observation be well enough?
• Do you have any specific aim other than making money other than trading?

Professional traders follow some rules in trading-

• Stay in discipline with hard work.
• Avoid crowd.
• Focus more on the plan.
• Stick to the rules.
• Make own decisions by themselves.
• Lead a stable, organized life.
• Don’t be too much dependent on the trading instruments.
• Accept losses and stick to the plan.
• Check for the warnings.
• Always be the controller, not being controlled by the tools.
• There is no magic in trading.
• Don’t lose focus in the middle of trading in counting your money.
• Don’t let yourself become furious after a loss.

Final Words

Remember, knowing about the traders is just starting your journey in this field. Trading is not about some skills and dealing with something repeating different activities. But, the traders have to obtain certain efficiencies.

The strategies and formats differ from trader to trader. Thus, we can define different types of traders. So, what do you think? How far are you standing to be a trader?

FAQs

Here are answers to the most frequently asked questions.