Forex market is one of the largest online trading markets, with millions of users all over the world. It is available 24 hours a day and accessible from all parts of the globe. Currencies from the Forex market can even be traded via binary options, and also with automated trading systems. Choose your way to trade at the Top 10 Binary Strategy website.
Because it is such a developed and popular market, there are various kinds of traders and strategies they apply. In this article, we will present you the most common types of Forex traders according to the time frames they use.
Time frames for Forex trading
We can distinguish types of Forex traders based on many criteria: the strategies they apply, the currencies they trade or the Forex markets on which they buy and sell. One of the basic and most common criteria is dividing them according to the time frames they use for the trades. The time frames are basically a part of their trading strategies. According to that, we can distinguish day traders, swing traders and position traders.
These strategies are applicable on other types of trading as well, such as binary or stock trading. However, in this article we will stick to the time frames and how they are applied to Forex.
Day trading is the most appealing solution for most traders, because it promises high profits over a short period of time. During one day, this type of trader will attempt to achieve high turnover rates on his trades, using ten to one hundred times the usual size of transaction. Day traders use short time frames, from one to fifteen minutes, which allows them to execute more trades over a short period of time. They rely on technical analysis and trading patterns, which help them gain profits. Since Forex market is highly volatile and the situation changes within seconds, this type of trading poses a high risk. Still, since it allows great earnings as well, many traders opt for this method.
Swing trading is in a certain way the opposite of day trading. In this case, the traders use longer time frames and leave the position open for at least a couple of hours, but sometimes even for days. The timing is more important in swing than in day trading, since the change in direction is what helps gain profits.
Although the approach differs from day trading, there is also one important similarity. As day traders, the swing traders also benefit from technical rather than fundamental analysis. They rely on trends and patterns and their earnings depend on them.
Position trading involves the longest time frames and it differs greatly from both day and swing trading. Position traders use the longest time frames, and they leave the position open for periods that last from a couple of days to a couple of weeks. Unlike day and swing traders, those who use position strategy are not likely to benefit from technical analysis. They rely on fundamental analysis and need long term models and trading opportunities.