What Type of Forex Traders Are You?

What Type of Forex Traders Are You?


I am sure you – and so many other traders in the world – have known for sure that the forex market holds tremendous profit potential. The number of people trying to seek fortune has caused forex brokers – legal and illegal – to appear like mushrooms in the rainy season.

Unfortunately many forex traders do not know well when they should make a transaction; buy or sell. That’s because they don’t know what type of trader they are. This ignorance causes them to “blindly” follow / copy what other, more senior traders do.

This type of trading is closely related to the character of a forex trader. Of course we agree that the character of people is different. Now, because traders are also human, the character of each trader is different. That’s why different types of trading.

For forex traders – especially beginners – it is very important to know the type of trading so you can find out what kind of method is suitable. So, even if you want to follow the trading style of other traders, you will not feel “stuck” because the trader has the same type of trading as you.

Trader Fundamental

Traders who use fundamental analysis as an analytical method will focus their attention on economic data or news before deciding to trade. He will see news related to a particular currency before making a transaction.

Basically fundamental analysis is more suitable for long-term trading.Indeed there is some economic data that can be used for short-term trading, but it is incidental such as the effect of US Non-farm Payrolls data or interest rate decisions from the central bank.

If several trading methods are based on a brief analysis, fundamental analysis may not change for days or even months. Maybe also in a matter of years. So don’t be surprised if there are fundamental (original) traders who can hold their positions for days, months, or maybe even years.

Technical Trader

Unlike the Fundamental Trader, the Technical Traders (or often called “technicians” ) do not care about any economic data or news as a basis for decision making. They use technical analysis in analyzing, generally (but not limited to) using chart price movements (charts).

Technical analysis can also be applied to short-term to long-term trading. Even so, technicians generally prefer to trade short to medium term. Such flexibility is lacking in fundamental analysis which is more inclined to long-term trading.

In technical analysis applies the rules of “Discount everything market action”, which can freely be translated into “price movement behavior reflects the sentiment circulating in the market”. According to technicians“totok”, price movements can provide clues as to where the market will move so they no longer need information from economic data or news.

You who still use economic data as a reference in forex trading may not be comfortable if you follow the steps of these technicians , because often they – especially the day traders – take trading positions that are contrary to the predictions of economic data to be released.

Trader Sentiment

This type is actually a Fundamental Trader combination with a Technical Trader. They combine fundamental and technical analysis to identify potential price movements. Trader Sentiment refers to the main trend of price movements and tries to find opportunities for currency pairs that move in line with market momentum.

For example like this, when technical analysis states that when the market is in an uptrend, sentiment traders will try to find the right momentum or fundamental reasons that support upward price movements. If for example EUR / USD is in an uptrend, then they will wait for confirmation of fundamental data which strengthens the positive sentiment for the euro.

Sentiment traders are also usually technicians who are “straight”. The principle of “the trend is your friend” is really held firm. They will not open short positions during an uptrend (although for example technical indicators have confirmed there is a chance for correction), or open long positions during a downtrend.

Bottom line

Maybe some examples of the trading types above can be a guide for you – especially beginners – to find the right strategy or role model . Actually there are still many types of trading that have not been explained in this article, but the three types above are the basis for various other types.

Don’t find the right type according to your characteristics? Contact me via Live Chat, or leave a comment below.

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