There are different ways to trade the market, specifically, there are different lengths of time to hold onto a trade. You could call these different trading styles.
Some traders like to be in and out in a few minutes capturing 3 – 10 pips, while others like to hang onto a trade for days, weeks even. There is a good fit for every trader, but that fit is different from trader to trader.
Here are the 4 different kinds of traders with a brief explanation.
Scalper:
A scalper is looking to make a lot of small trades during their trading session. These small trades are aiming for 3 – 15 pip gains. Scalping is not for the inexperienced trader. A scalper is using charts to find trades and will be using very small timeframes, the 1 minute or the 5 minute charts.
Scalpers have a couple of requirements. First, you have to find a broker that allows scalping as not every broker will let you scalp. The other is a very tight spread. The goal is to make very small gains, so a small spread means you can get your gains faster and with a higher probability. Finding a broker that offers a 1 pip spread, or less, is ideal.
Intraday:
An intraday trader can also be called a Day Trader. The positions taken are meant to be closed out within a very short period, anywhere from an hour to 2 days. Profits from 15 – 150 pips are in the range of a day trader. The charts used by a day trader range from the 5 minute to the 4 hour charts, but the most commonly used timeframes are 15 minute and 1 hour.
Most traders fall into this intraday trader category. It’s a good middle ground as there are many trades to be had but the pace is manageable and won’t make you have to act too quickly.
Swing:
The Swing trader uses timeframes of 4 hour to 1 day. Swing traders goal is to gain from 100 – 250 pips per trade, each trade lasting anywhere from 2 days to 5 days. Most Swing traders are using technical analysis like the Intraday and scalpers are using.
Position:
Position traders are the longest term traders. Position traders hold a position from 1 week to several months, looking for gains up to 1000 to 1500 pips. The timeframes traded are likely 1 day to even the weekly charts.
