Which is the Best Forex Trader Type?

Trading in the Forex market is no easy feat considering the extreme volatility involved and enormity of the market. Being a Forex trader, you must be prepared with your own styles and strategies and chances are you’ll fall in one of the three major types of Forex traders.

The Three Forex Trader Types

The first type of Forex trader we will discuss is the Day Trader or those types of trader that, as the name indicates, trade for the day or one trading session. Because they only trade for a day, this means they only hold short-term positions and thus they seek out trades that usually have quick turnovers. They are also mostly traders that are able to trade in high volume due to the fact that they are trading quickly. Their main tool are technical analysis and volatile currency pairs.

The next type of trader is the Position Trader which is essentially the opposite of a Day Trader. The position trader is in the market for the long-term. They are those who are willing to wait to profit. These waiting periods can last up to a few days to several years. They seek out trades that have growth potential in the long run. Their main tools for trading are market events such as central bank interest hikes and political events, economic models, and market history.

The last major type of Forex trader is the Swing Trader. The swing trader derives profit from, as the name implies, swings in trades. It trades longer than the day trader but not as long as the position trader. Their main tool is similar to the day trader, technical analysis but prefer liquid currency pairs.

The Best Type

The best type of Forex trader type is none of the above. Different Forex traders find prowess in the different types of Forex traders. In which Forex trader type you’ll excel will depend on different factors such as your preferences, your capital, your strategy, and your analytical abilities. To truly know which Forex trader type is best for you, you simply have to either examine yourself or try them.