In this article, we will talk about which type of trader makes the most money in the forex market.
There is no one particular type of trader that makes the most money. Traders come in many shapes and sizes. There are Day traders, Swing Traders, Scalpers, and position traders. Each of these types of traders has its own unique traits.
If you want to be a successful trader, you need to be able to identify which type of trader you are. Keep reading on to learn what trading style suits you the most. You can be profitable with either style of trading but what will make you the most money is the type that suits you the most.
Day traders
Day traders take trades every single day. In the case of the forex market, it’s 5 days a week. Despite what many internet gurus will tell you, day trading is not a get-rich-quick scheme. It is a risky way to make money and it is not suitable for everyone.
While it is possible to be a profitable day trader, it does take a lot of patience and learning to become one. Having a good understanding of market dynamics will help you avoid making poor decisions when it comes to day trading.
The most important thing to remember is that you should only use your own hard-earned cash to trade. This means that you should not borrow money to day trade. This could end up costing you your financial future. Only borrow money when you are confident that you can be a profitable trader. You can also practice your day trading skills in a demo account.
It is also important to find out what your options are when it comes to choosing a platform. You should find a broker that suits your trading needs. If you are interested in day trading, you might want to consider a good broker such as XM Broker. They provide you with a variety of features that will help you to become a better trader.
In the long run, the most successful day traders are those that are able to identify or develop a profitable strategy. To become a profitable day trader you should journal all your trades. This is a very crucial step to becoming a profitable trader. Check out our free trading journal that you can download to track your trades.
The best way to achieve this is to learn how to read the market and choose the right trades. You might want to start off small with a few thousand dollars, and then move up as you gain experience. If you are interested in learning how to trade the forex market step by step check out our free complete trading guide here.
Swing traders
Whether you’re looking to add some extra cash to your bank account or you’re just looking for something fun to do, swing trading can be a great way to earn some money. However, you’ll need to take certain factors into account before starting to swing trade.
Swing traders take roughly 1 – 3 trades a week. With Swing trading, you will be holding your trades overnight. Swing trading is suitable for a trader who has a very busy schedule because you don’t need to stare at the charts that often.
When it comes to swing trading you can use day trading strategies as well. Swing trading can be less risker than day trading mainly because you will be taking lesser trades. Also with swing trading, you have to wait for a really good setup before you start taking a trade. Since you will only be taking very few trades, it is important that you analyze the markets carefully.
Swing trading is also about maximizing the profits you make on each trade. You can do this by using a trailing stop loss when swing trading. We personally use the exponential moving average as a trailing stop loss when swing trading to maximize profits.
Scalpers
Regardless of whether you’re a beginner or a pro, you must have a good understanding of how the market works to become a scalper. Besides, you also need a lot of discipline and concentration if you want to make the most money with scalping.
Scalping is a strategy whereby traders look to profit from small price movements in the financial markets. Most scalpers use technical analysis to analyze the market and identify trading events. They enter and exit positions within a short period of time.
Most scalping strategies operate on a one or five-minute time frame. They aim to take advantage of value gaps created by bid-ask spreads. Generally, the smallest spreads are offered on the EUR/USD, GBP/USD, and USD/CHF.
To get the most out of scalping, you need to read the market and know when to enter and exit your trade. In addition, you must be aware of any news releases that may affect the market.
You should also be aware that the market changes frequently. During a trending day, the market will often make lower lows and higher highs. When this happens, you can expect to have a losing period. However, during these periods, you can still have a profitable trade.
You should also learn how to choose risk management. You should always try to minimize your losses. A scalper who pays a wider spread will have to lose 20% of his profits in a month. Moreover, you should know that your position could turn into a loss if you don’t exit your trade before it reaches a crucial point.
A good strategy to achieve success in scalping is to trade only during the most liquid times of the day. These are usually between 8:00 am and noon Eastern Time. This doesn’t mean that you cannot scalp at other times.
Scalping is generally harder compared to day trading and swing trading because you have to be highly focused when scalping. Also, you will be taking a lot of trades, this could mean 100s of trades per day.
This makes it harder to track your trades. If you are a beginner or an intermediate trader, we recommend you do day trading or swing trading. Scalping is certainly something you can experiment with but we personally do not recommend scalping if you are not an advanced trader.
Position Traders
This type of trading is more of a long-term trading style. Position traders hold the trade for months or years. This trading strategy is not suitable for the forex market. This is more suitable for the cryptocurrency market or the stock market.
If you want to trade the forex market it is a good idea that you stick to day trading or swing trading. You can take some position trades in the stock or the cryptocurrency markets if you want to diversify your trading portfolio.
Conclusion
As discussed in this article, there is no one type of trader that makes the most amount of money. You can make a lot of money with any type of trading. You just need to be patient and master the skills necessary to become a successful trader. To learn how to become a profitable trader step by step check out our free trading guide here.
