What Kind of Trader Am I?

So, what kind of trader am I?

Well, one of the first questions to ask is, “how much time do I have to trade currencies and how long can I comfortably be in a position?”

We can identify different trading personalities by time frame. Take a look at these different styles and see which one may fit you.

• Scalping – Scalpers are very short-term traders, usually in and out of trades within seconds. Most forex brokers discourage this type of trading. It’s also extremely dangerous due the high number of lots required to make a decent profit off a couple pips. Not for the faint of heart or shallow pockets.
• Day traders – Day traders open and close positions in the same trading session.
• Swing traders – Swing trading holds trades for days.
• Position trading – Long term position traders hold trades from weeks to months at a time.

Next question to ask is, “how do I want to analyze the market and decide on which trades to take?”

• Technical Analysis – using charts and technical indicators to analyze the past price movements of a currency pair to possibly see where the price may go in the future.
• Fundamental Analysis – Watching and analyzing economic news reports and indicators such as GDP, CPI, Employment data, or any political news that may affect a country’s economy and their currency.

And finally are you a system trader, or are you a discretionary trader?

• System Trader – a system trader or mechanical trader tends to take to signals from system of technical indicators to automatically enter and exit trades. For instance, if the stochastic indicator shows that the currency pair is oversold, the system trader will automatically enter a buy on the currency pair.
• Discretionary trader – this trading style usually refers to traders who use both technical and fundamental analysis. A trader’s technical method may signal a possible trade entry, but his or her analysis of the fundamental landscape may show a different story on the same pair.