Types of trading and various trading strategies

You set an OTO order when you want to set profit taking and stop loss levels ahead of time, even before you get in a trade. Positional traders always look for the longer-term effect of fundamental factors and then use technical analysis to decide the entry and exit points for the currency pair. Their operations are almost always closed by the end of the day, rarely the next day. Indeed it is so popular that even brokers that never offered the MT4 have been forced to make radical decisions to include this software in their product suites. You may not get filled or, worse, your stop loss might not be honored! A scalper can open anywhere between 30 to 50 trades per day.

Swing traders are for those people that like to hold on to trades for several days at a time. These types of traders can’t monitor their charts throughout the day so they dedicate a couple hours analyzing the market every night to make sound trading decisions.

The different types of currency traders also use different chart time-frames to place their trades.

But when taking time into consideration, traders and strategies tend to fall into three broader and more common categories: The Day Trader Let's begin with what seems to be the most appealing of the three designations, the day trader. A day trader will, for a lack of a better definition, trade for the day. These are market participants that will usually avoid holding anything after the session close and will trade in a high-volume fashion.

On a typical day, this short-term trader will generally aim for a quick turnover rate on one or more trades, anywhere from to times the normal transaction size. This is in order to capture more profit from a rather small swing. As a result, traders who work in proprietary shops in this fashion will tend to use shorter time-frame charts, using one-, five-, or minute periods. In addition, day traders tend to rely more on technical trading patterns and volatile pairs to make their profits.

Although a long-term fundamental bias can be helpful, these professionals are looking for opportunities in the short term. This pair is considered to be extremely volatile, and is great for short-term traders, as average hourly ranges can be as high as pips. Swing Trader Taking advantage of a longer time frame, the swing trader will sometimes hold positions for a couple of hours - maybe even days or longer - in order to call a turn in the market.

Unlike a day trader, the swing trader is looking to profit from an entry into the market, hoping the change in direction will help his or her position. In this respect, timing is more important in a swing trader's strategy compared to a day trader. However, both traders share the same preference for technical over fundamental analysis.

The entry would be placed on a test of support, helping the swing trader to capitalize on a shift in directional trend, netting a two-day profit of 1, pips. The Position Trader Usually the longest time frame of the three, the position trader differs mainly in his or her perspective of the market. Instead of monitoring short-term market movements like the day and swing style, these traders tend to look at a longer term plan.

Position strategies span days, weeks, months or even years. As a result, traders will look at technical formations but will more than likely adhere strictly to longer term fundamental models and opportunities. These FX portfolio managers will analyze and consider economic models, governmental decisions and interest rates to make trading decisions.

The wide array of considerations will place the position trade in any of the major currencies that are considered liquid. This includes many of the G7 currencies as well as the emerging market favorites. Additional Considerations With three different categories of traders, there are also several different factors within these categories that contribute to success. Just knowing the time frame isn't enough. Every trader needs to understand some basic considerations that affect traders on an individual level.

Leverage Widely considered a double-edged sword, leverage is a day trader's best friend. It is manufactured by Spotware Systems Ltd, a company which specializes in making trading platforms for the ECN environment.

Currenex is another brand of forex platforms which comes in two versions. There is the Currenex Viking platform which is the ECN platform and the Currenex Classic platform which is the dealing desk platform that operates under market maker conditions. The Currenex Viking is suited only for professional traders as it has an interface that is a bit difficult to navigate around.

Currenex classic comes with charts and other tools that make the trading platform a bit easier to use, making this platform suited for beginners and those without much experience. This classification divides trading platforms on the basis of the trading model on which the broker supplying the trading platform operates.

Dealing desk platforms are operated by market makers. Pricing comes straight from several liquidity providers and these are all displayed on the platform so that the trader can make a choice as to which pricing model better suits his trade objectives. This is also called direct access trading. Mail will not be published required.

Binary Options 24Option Review. Given the time horizon of their operations, they usually prefer more underlyings, but remaining confined within a single general market, not to dissipate their energies; for example two, three or four pair of the Forex market. A sub-category of the day traders is the Scalper. These are traders who operate with very consistent leverage and very short timescales, in the order of minutes or seconds per transaction.

Their goal is to close in profit a lot transactions with small gains during the course of the day. Another thing that distinguishes traders is the type of study they have done before deciding whether to open a position in the market.

They are usually the more long-term investors, who dedicate themselves to the study of fundamental, theoretic and global nature information. Depending on the underlying asset, the relevant information may be different: Usually swing, day traders and scalpers use a market approach of this kind but also in the long term is much used.

These traders claim that any news, event, geopolitical situation and so on and so forth is already showed, ie represented, in the price. They think the price already includes and shows everything. According to these theories, all that remains to do is read the price, analyze the behavior and configurations with technical tools, and act accordingly.

In any case, distinctions aside, the lowest common denominator that brings together all the traders is that they are people who do their studies and their analysis usually in front of one or more PC monitors , dedicating their workday to this activity, which can be more or less longer compared to a traditional job.

With the evolution of computer science, some of them have managed to bring their decision-making patterns within a complex system of computing rules, creating automated trading systems, or Expert Advisor, which, thanks to a minimum or no supervision at all, operate on the market on behalf of the trader. Your email address will not be published.

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But when taking time into consideration, traders and strategies tend to fall into three broader and more common categories: day trader, swing trader and position trader. 1. The Day Trader Let's begin with what seems to be the most appealing of the three designations, the day trader. Forex traders use a variety of strategies and techniques to determine the best entry and exit points—and timing—to buy and sell currencies. Market analysts and traders are constantly innovating and improving upon strategies to devise new analytical methods for understanding currency market movements. Types of Forex Traders: Scalpers, Day Traders, Swing Traders and Position Trading There are different types of Forex traders. The type of a Forex trader one is depends on the amount of time that they hold their currency transactions.