What Type of Trader Are You?
What Type of Trader Do You Want To Be?
These are key questions that every aspiring trader needs to answer. If you are new to Forex or any other form of financial trading, then you will certainly have to do some homework before you may even be ready to answer these questions, but let’s see if we can help.
Most people when they are learning normally have a day job which restricts the times of the day when they are available to trade the markets. If this is the case then there are probably 2 options for you to consider:
· Swing or Position Trader - trading mainly on higher timeframes such as the 4hr and Daily charts but also the 1hr and aiming to hold positions over several days to even weeks in order to make several hundred pips or more. This style of trading may provide you with a greater range of currency pairs to trade as the spread will be less of an issue.
Scalping is trading on the shorter term time frames such as the 1min and 5 min charts and aiming to make 3-10 pips per trade. So you get in, get out, and get done in the short time window that you may have available, or may open and close multiple trades in a day. You may focus on one or 2 currency pairs which have a decent daily range and a typically low spread such as the EURUSD.
If you have more time during the day then you could be one or both of the above plus you have the third option of:
· Day or Intra-Day Trader - trading where you would be trading on the 15min, 30 min and 1hr charts and aiming to make anything from 20 to 100 pips. In this case spreads may be of some concern but less so than Scalping.
The point is you need a trading style (one of the above) that suits your lifestyle and then you need a strategy or strategies that suit that style of trading and then currency pairs which are also best suited to that style.
So if you are an aspiring Swing or Position Trader then higher time frame
Harmonic Trading strategies fit nicely with this trading style and you have more choice over which pairs to trade.
If you are a Scalper then again
Harmonic Trading strategies can be adapted to achieve this trading style but your choice of suitable currency pairs will be limited.
Lastly for Day and Intra-Day trading again
Harmonic Trading strategies can be used to match this trading style and you will have a reasonable range of currency pairs to trade.
How can Harmonic Trading strategies be used for all 3 trading styles? You may ask. Well, harmonic patterns are naturally occurring and repeating patterns in any liquid financial market on any timeframe. You just have to have the training to know how to identify them, how to trade them to maximum advantage and how to adapt your Harmonic Trading strategies to match the chosen trading style.
Top Trading Tip: Think long and hard about what style or type of trader you want to be. It may be that you can adopt all 3 trading styles depending upon your available time, on any particular day, provided you have the right
trading strategies (the tool box) and the right mind set and necessary focus.