This article looks at the different foreign exchange trading personalities on the forex market.
There are four foreign exchange trading personalities seen on the forex market, and it is important to identify which type you are. This is important as the type of personality you have can affect the strategy you choose. If you want a short-term, high-speed forex trading style then you cannot have the same temperament as the person who wants to see profits build over time. This article examines the different personalities and what trading types are most fitting.
The short-term foreign exchange trading personality
People are attracted to the foreign exchange market for various reasons, but if you are one who is drawn to the high-speed nature then you would be suited to short-term strategies. These individuals are usually impatient and require instant gratification regarding trade results. Short-term traders do not hold their positions overnight, and the timeframe of the trade will vary from seconds to hours.
If you are highly impatient, you should consider scalping as a forex trading strategy. This type of trading involves executing multiple trades during one day using small pip amounts in order to make profits. While it does not seem profitable, if you accumulate the numerous trades at the end of the day one can make a substantial amount. To be an effective scalper, you must desire instant gratification but should be able to concentrate on trading for several hours at a time.
If you prefer to wait a few hours for a trade to develop, then you should consider day trading. Day trading utilises a trend to incur profits, but does not hold any positions overnight.
The medium-term foreign exchange trading personality
The medium-term trading personality is more patient than the short-term trader, but is not so patient as to wait days for the trade result. These individuals are generally swing traders and will use the market movements to make money. This can be done using either technical or fundamental analysis, dependent on the trader’s preference. As the trend can continue overnight, the medium-term trader is able to leave a position open; however, this personality will close it after one or two days has passed.
The long-term foreign exchange trading personality
Any individual who is very patient and enjoys seeing a profit build over time will suit a long-term trading strategy. This trader cannot understand the enjoyment of small, speedy profits, and takes pleasure in setting up a trade over a prolonged timeframe. The timeframe of a long term trade can vary from weeks to months.
A long-term trader will use fundamental data to set their trades and choose the currency pairs. Generally, these positions traders are better funded than the other traders.
The combination foreign exchange trading personality
This type of trader is one that wishes to take advantage of all trading opportunities on the foreign exchange trading market. There are few traders who fit into this category as it is difficult to find an individual who is patient and impatient at the same time. The combination trader will use different strategies dependent on the currency pairs they are using and the market conditions.