What Type of Forex Trader Are You?

What Type of Forex Trader Are You?


Want to understand what type of Forex Trader are you? Interested in Forex trading? You have probably heard a lot about it, and the whole making money aspect seems exciting! Before you drive into this massive pool of Forex trading, it’s recommended that you know the basics.

Well, the basics are pretty simple as it only involves knowing the stock, and mainly the type of forex trader you ought to be.

The type of trader you are determines the type of strategies you implement and what you prefer. Some of these types are in line with your personality. So let’s find out!


Fundamental Trader

Fundamental trading pays attention to a company’s events including financial statements or economic news to decide whether and when to buy stock. For instance, if a company financial statement shows growth, which poses a perfect time to trade.

Since fundamental trading has to observe various options before making a trade decision, we can say it is associated with the buy and hold investing strategy which is mainly long term but also works for some short term trade. Into perspective; Company’s release financial statements after a duration of time, say quarterly or annually hence a fundamental trader will wait for the financial statements and determine financial health then decide whether to trade or not.

Despite challenges from financial markets, which sometimes can be unpredictable and extend to periods of time in wait, the buy and hold strategy of investment always seems appealing to most investors as it’s based on logic and facts.

Fundamental traders can also be referred to as position traders.


Noise Trader

Noise trading pays attention to economic trends and market activity in making trading decisions. It looks at previous prices, volume hence drawing patterns that provide a prediction of future direction.

Based on technical analysis of the market activity noise trading often doesn’t always offer concrete evidence to decision making, so it’s always required to take advantage as soon as possible to the supposed opportunities.

The main challenge on this type of trading is when market predictions take a different direction.


Sentiment Traders

Sentiments traders move with the trends. They neither wait for companies securities nor guess the future market activity or direction; instead, they go with the market momentum. Where the market is at is where you find them. But to be able to move with the market they have to find the market movements and participate in them. They incorporate both fundamental and technical analysis in finding market trends using two main approaches. The Contrarian approach which concentrates on excessive positive or negative trend and swing approach that taps to price movements.


Market Timer

Market timer trading involves guessing which side a security will move either up or down. Market timers are day traders who after guessing the market movement pick a side. In deciding which side to pick, they have to review both economic data and technical indicators. Their trade side decision is made at the beginning of the day in that when the market closes they are either with a profit or a loss.

While this kind of trading proves profitable for short term traders, it is faced with strong opposition from some academic investors who do not believe market movement can be accurately predicted.


Arbitrage Trader

Arbitrage trading is the buying and selling off assets in different markets in different forms. Most traders take advantage of the different prices offered on these markets with intention drawing profits. Market inefficiencies make it possible for arbitrage trading.


How to Know which Type of Trader You Are


Well, the easiest way of knowing your type is by reading and analysis through various kinds of trading and strategies implemented there in. You will be able to judge the type of trade you want to involve in. Choose one that supports your ideas and whose contents are easy, relevant and doable to you.

If unable to decide, you may try various trade types and see which ones you find most comfortable and which ones work.

The third option, you can also take online quizzes from various platforms. These online quizzes note your personality and preference and knowledge to determine your type.


Why it’s Important to Choose One that Fits Your Personality


Naturally, to achieve high performance on any kind of activity or event; it has to be somehow attached to you most likely in the form of passion, skill or just general interest. With trading is not just a bout skill and knowing market trends. It’s about you knowing yourself and what works for you. What you can or cannot do. All these are drawn from your personality.

Choosing your trade in line with your personality will enable you to maximize your strengths there by providing a possible success in this field.

Learn your trends and stick to it!