Some factors contribute to the success of traders. These are your research and analysis abilities, instincts, and trade timing.
When it comes to foreign exchange trading, timing is everything. Perfect timing allows you to carry out your ideas and strategies effectively.
Forex traders are broadly classified into three main categories based on time frame: day traders, swing traders, and position traders.
In an intraday timeframe, a day trader makes frequent and high-volume trades.
At the end of the day, these traders rarely have anything in their hands. This means that any negative news that comes after the market closes and before the market opens the next day will not affect their trade.
Every day, you must strive for high turnover rates on your numerous trades. To be a successful day trader, you must be able to adapt to rapid changes in rates. You must also be an expert in the techniques because these traders rely heavily on technical trading patterns. You must look for quick opportunities as a short-term trader.
You must look for volatile currency pairs as a day trader. The GBP/JPY, for example, is one of the most volatile currency pairs. In an hour, this pair can move up to 100 pips (percentage in point or price interest point). Euro/USD currency pairs, on the other hand, show only 10-20 pip ranges in an hour.
The former currency pair is best suited for short-term day traders.
A swing trader, as opposed to a day trader, holds his trade for a longer period of time, anticipating a market turn. They, like day traders, rely on technical trading patterns rather than fundamental analysis. They must, however, be kept informed of any news that may cause volatility in the forex market.
Swing traders, unlike day traders, do not need to be concerned with every single pip in their trades. As a result, there is no need to be overly cautious. However, when it comes to chart analysis, you must have a keen eye for detail. As a swing trader, you will almost certainly need to trade in more liquid currency pairs, such as the GBP/USD.
Position traders, as opposed to day traders and swing traders, evaluate their traders’ performance over longer timeframes. They are unaffected by short-term price fluctuations because they are looking for higher profits over time.
As a position trader, you must be patient because your funds may be frozen for several months. You must also be an expert in advanced analytical skills. You must understand fundamental models and opportunities and must adhere to them. Before trading, you should research various economic models, upcoming government announcements, and interest rates. With so many variables to consider, you can trade in any of the major liquid currencies, including G7 and emerging market currencies.
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