All people are unique, and possess individuality. This is true in all areas of life, and trading isn’t an exception. Every trader is different based on a variety of factors: different level of aggressiveness, deposit loads, trade duration, as well as many other features which the trading style of each trader very unique. You should always be aware of your characteristics and use that awareness when selecting trader types to your favor.
Despite the said uniqueness, there is a set of criteria used to distinguish each trader based on several criteria.
Trader types by trading style:
Scalping – intraday speculative strategy based on opening a maximum amount of trades during very short intervals of time. Scalpers often spend hours next to the PC in order to find a lot of small but profitable trade opportunities. You need to have a good reaction speed and be able to sit out a lot of time in order to be a good scalper. An trading account with tight spreads is also a must-have for this type of trading.
Day Trading – intraday strategy, which requires closing all trades before end of the day, without rollovers (often associated with fear of possible price gaps during rollover). This strategy is somewhat different to scalping due to longer trade duration and lesser number of daily trades. This is a good and balanced option for traders that have time to manage and monitor trades and charts, but without the endless every-minute attention. Does require good awareness of news factors, as such can affect any sort of intraday strategy greatly.
Swing Trading – is a strategy which requires opening a low number of trades that can go on for several days. Like all long term strategies, requires a lot of patience. Not every person has the nerve to wait out a long term trade, especially if it is in a drawdown or loitering at a near-breakeven point, consuming swap charges as it goes on. Swing trading is a great option for part time traders.
Positional Trading – a strategy where trades are opened for weeks, months, and sometimes even years. This style of trading requires an enormous amount of patience and an extremely calm attitude. The undisputed pro of this strategy is free time though. After a trade has been opened, it requires very little attention. Stay aware of your margin though – this type of trading only works with a sizeable deposit that is required to survive great drawdowns that always stalk such trades.
Which trading types should I choose for my trading?
Follow your individuality. Only you know best how much patience you are capable of, how much free time you have, what deposit size you can afford, etc. Any of these strategies can be profitable, you just have to select what is optimal for you.
Generally, newbie traders tend to begin their trading journey with scalping and daytrading, however that may not be the best option to go with. It is best to begin with more long term strategies, for example on the D1 timeframe, where market noise is almost completely absent and technical analysis works best.
Trader types by behavior
Bullish traders – trades which prefer to buy trading instruments in order to gain from rising prices. in other words, bulls are always on a lookout for an uptrend, and move the market price in the upwards direction. An uptrending market is often called “bullish”.
Bearish traders – traders which sell instruments to make a profit on declining prices. Bears like downtrends, effectively pushing the price downwards. A downtrending market is typically called “bearish”.
Sheep – are traders which act spontaneously and without much consideration. Sheep are the common prey in the market, whose deposits server to benefit the other market players, hence the analogy.
Pigs – greedy traders, which tend to enter the market too early, or sit on the fence far too long in order to get the maximum out of their trades.
Hares – this is the common name for scalpers.
Chicks – Overly careful and cowardly traders. Typically lose potential gains and miss good entry points due to fear and anxiety in the face of acting upon a trade opportunity.
Whales – Traders which regard trading as their business. Calm and cold blooded, observe risks and make calculated trade decisions.
Trader types by decision making behavior
Intuitive trader. Makes decisions based on their intuition, evaluating each situation independently, and without consulting other opinions. Their gut is their main driving force when entering a new trade. A common drawback of such traders is tendency towards emotional reactions to certain market events.
Intellectual trader. Use extensive fundamental/technical analysis to make trade decisions, are able to evaluate the current situation and make good conclusions.
Instinctive trader. Follow their instincts. Make decisions based on emotions, whenever prices fluctuate significantly, in a way, trying to board a “departing ship” when price move after significant news releases. This is a great way to lose your deposit. There’s also a sub category of instinctive traders that tend towards indecision, and those often turn to using certain signal services or indicators. Such traders are usually more successful than their more aggressive colleagues.