One of the many exciting things about forex trading and that which makes it a truly unique experience is that we can make profits from both when the price rices as well as falls. I.e lets suppose we buy a EURUSD currency pair, and then when the price of the forex pair rices (EUR going up against USD), we clear the profit. If we sell the same currency cross we earn profits once the EUR loses to the USD.
These cycles is the natural movement of any currency pair. The way you choose to act on these cycles shows what type of Forex trader you are!
Here we will look at three different types of traders:
Short Term (Scalper)
A scalper is a trader who goes for many small profits as a trading strategy, often of 3-10 pips pr. trade. They will usually base their decisions on charts with 1-5 minute candlesticks and will make several trades in the day. Scalpers trade currencies with low spreads such as the major pairs.
Mid Term (Day Trader)
Day traders are a Forex trader who holds medium term positions. They will commonly hold a currency pair between 15 minutes to one day,therefore day trading. They will usually use two charts with 5 minutes and 15 minutes candlesticks. They try to get profits that could be something like 10-50 pips.
Long Term (Position Trader)
Position traders trades on the long term and based on 1-4 hours candlesticks. They will have high pip profit goals as high as to 400. This strategy requires a large risk tolerance.
