Forex trader is defined as the individual who attempts to speculate the upcoming price movements of the various currency pairs in the FX market.
Not all traders though have the same strategy for predicting what may happen next.
Some are intraday forex traders whereas others are long-term speculators.
Despite the different trading styles, the objective to make money and increase profitability over time is common for all.
Are you a short-term or long-term forex trader?
A forex trader can be either a scalper, a medium-term trader or a long-term investor.
A scalper is one who trades small price movements and closes the orders within minutes. What is distinct about this style is that a large amount of leverage is used.
On the other hand, a medium-term trader holds positions for one or more days and focuses mostly on technical strategies for speculation.
Furthermore, a long-term trader is the person who does not aim to benefit from short-term price movements but mostly acts as an investor and holds positions for months or years.
Therefore, after having chosen your style of trading, it is, thereafter, important to implement or apply your strategy at all times.
As a scalper, a medium-term trader, and or a long-term investor you should pre-define your entry and exit criteria, and follow your risk and money management rules with discipline.
If you are willing to trade right, and acquire and maintain long-term profitability, you should first observe and go through the four stages of trading success:
- ”Respect” your funds and manage your capital right, e.g. lot size or volume invested
- Define your entry, either via price action or indicators and always repeat or use the same pattern
- Your exit criteria are vital when it comes to managing your losses and gains
- Maintain proper psychology to be able to apply your strategy with success rate
Moreover, your trading style defines your mental and psychological interpretation of the markets.