What type of forex trader are you?

Forex traders come in all shapes and sizes. Everyone has their own unique style of trading forex, but it is possible to discern some similarities between successful traders.

There are some distinctive trading styles. Many forex traders are amateurs, playing with a demo account from a broker like CMTrading for their own amusement whereas the cream of the crop are consummate professionals whose livelihoods depend on making successful trades. For the purposes of this article, we are going to look at the different types of professional or semi-professional forex traders.

See if you spot your own trading style from the list below.

Day Trading
Day traders make short-term trades. They open and close a trade in a single day, which saves them money on broker fees (brokers usually charge a fee when a trading position is left open overnight). Day trading is ideal if you prefer to trade forex during the day and keep your evenings free for other activities. It won't work for you if you have a day job to do - unless your boss is super understanding!

When day trading, begin your day by analyzing the markets and deciding which way your chosen currencies are likely to move. Open positions and then monitor them throughout the day.

Position Trading
Position trading is a long-term forex trading strategy. Unlike day traders, position traders hold on to their trades for months or even years. To be a position trader, you need oodles of patience and a good understanding of underlying market fundamentals. You are the type of person who can comfortably predict which way the markets will move in the next year.

Bear in mind that you will need a significant amount of trading capital to be a position trader. Therefore, position trading is not for amateurs. But if you are calm, considered, and willing to play the long game, position trading is perfect for you.

Scalp Trading
Scalp trading is high octane forex trading. Scalp traders make fast decisions and only open trades for a few moments. Their goal is to make small profits when the markets are busy. Scalp trading requires tremendous focus and you will have to be prepared to spend your trading day staring at charts.
 
Successful traders don't dither over trades. They have the cool head needed to make instant decisions and carry them out. Scalp trading is not for everyone, but if you are immune to stress, it could be a successful strategy.

Swing Trading
Swing trading is another long-term forex trading style, but unlike position traders, swing traders only keep their positions open for a few days. Swing traders look for medium-term patterns and trends. They make traders when they feel there is a high probability that they can make a profit.
If you have a day job, swing trading is for you. Use your evenings analyzing market data and take advantage of medium-term market movements.

Which trading style best suits you? Let us know in the comments!