Which type of forex trader are you? Importance of time frame.

There are some things that distinguish a good trader from a great one. Courage, instinct, being smart and of course timing, are some of these features. As commonly known, there are various types of forex traders and there are also various time frames that help traders develop their ideas and execute their trading strategies. Timing is helpful for traders in that it helps them consider things which they cannot control.

Some of these things include position leveraging or the impact of scheduled and unscheduled news releases in the market.

Therefore, timing is always a major factor to consider when participating in the foreign exchange market, and it actually shouldn’t be ignored by beginner traders.

If you want to learn more about time frames, how to use them to your advantage and the different types of traders, then read on.

Types of traders & time frames

When looking at the broader picture, traders go by different labels and designations, and there are plenty of them. But when taking a closer look, there are actually four common categories that traders and strategies fall into:

The Day Trader

This is the most appealing of the three categories. A day trader will trade during the day, as the name suggests. This type of trader will usually avoid holding a position after the session closes. Typically, these are short-term traders which generally aim for quick profits on one or more trades in order to gain more from a rather small range. Therefore, they use shorter time frame charts, of 1, 5 or 15-minute periods. Finally, day traders rely more on technical trading patterns and volatile currency pairs to make their profits.

Swing Trader

Swing traders take advantage of a longer time frame and will sometimes hold positions for a couple of hours, days or even longer. Not similar to the day trader, the swing trader is looking to earn something from an entry into the market, with the hope that a change in the movement of a price will help their position. Therefore, timing is even more vital for a swing trader than for a day trader.

The Scalper

The Scalpers are short-term traders and hold positions for a few seconds to a few minutes aiming to grab very small amounts of pips as many times as possible at the most liquid times of the day. They make small gains from each quick trade and usually study charts of 1 minute to 15 minutes time frames.

The Position Trader

This is the longest time frame of all of the above. The position trader perceives the market differently. Instead of examining short-term market movements, these traders go for the longer-term plan. Position strategies take days, weeks, months or even years. Therefore, longer-term fundamental models and opportunities are taken into account including economic models, governmental decisions and interest rates.

Bottom Line

Time frames are extremely important to traders and their trading strategies. Whether you are a day, swing, a scalper or even a position trader, time frames are always an important consideration in a trader’s plan especially for newbies.

Exención de responsabilidad:
Esta información no debe considerarse como un asesoramiento o recomendación sobre inversiones, sino únicamente como una comunicación de marketing.

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