Types Of Forex Traders And How To Be The Type Of Forex Trader That Makes Money Over The Long Term
Most people, myself included, talk about “Forex traders” without distinguishing between the different types of Forex traders. And there are many different types of Forex traders.
In general, a Forex trader is someone who buys and sells currencies in the Forex market with the intention of making a profit. Regardless of what type of Forex trader you want to be… this is going to be true.
After all, I don’t think anyone is participating in the Forex market with the intention to lose money.
But not all Forex traders are the same.
There are 3 things I want to accomplish on this page:
- Firstly, I want to give you an overview of the different types of Forex traders
- Secondly, I want to explain what type of Forex trader I am
- And lastly, I want you to see why my decision has been essential to my success
Choosing what type of Forex trader you want to be is the first step on your Forex trading journey. Choose wisely because your choice can determine if you are going to be a successful Forex trader… or just one more person who “tried” Forex and failed.
Since this page is detailed, I’ve provided a Table Of Contents so you can find what you’re looking for easily. I suggest reading this page all the way through once… and then revisiting sections you want to explore in more detail later.
This website and what I teach is directed at a very specific type of Forex trader… the retail Forex trader.
So, that brings us to our first distinction.
“Institutional” or Professional Forex traders are hired by banks or other financial institutions to trade other people’s money. The pro Forex trader trades Forex with the intention of growing a large account for clients.
Professional Forex traders make their money by being paid a salary, getting a commission on the profits or both.
On the other hand, there are at home, or “retail” Forex traders.
These traders trade their own money with the intention of growing their account for personal gain. They are not paid a salary to trade, but rather profit as the account balance increases.
I am strictly an at home Forex trader. I have never traded other people’s money, nor do I want to.
Frankly, I think being an independent, at home Forex trader is an advantage, and allows me to greatly outperform pro traders and other investment opportunities.
I’m assuming you are here because you are interested in becoming a profitable at home trader as well. If that is correct, you are in the right place.
How you decided to make your trading decisions can also determine what type of Forex trader you are. I want to focus on 3 types of trader defined by your overall Forex trading approach:
- Fundamental Forex Trader
- Technical Forex Trader
- Hybrid Forex Trader
Let’s go over each…
Fundamental Forex Trader
Fundamental Forex traders assess the economic well-being of a nation. This is how they determine the strength or weakness of the currency and make trading decisions.
These traders keep a close eye on the news monitoring events that might create a change in the value of the currency. It also means having in-depth knowledge of economics and how certain conditions and events can impact the strength of a currency.
I personally don’t pay attention to the news or talking-heads on the television. Sure, it might make you sound smart at the dinner table. But fundamental traders are wrong just as much as technical traders… so why go through all the bother?
Technical Forex Trader
Technical Forex traders focus strictly on what they see on the charts. This can take the form of price action, patterns or can be aided by certain indicators placed on the chart.
Technical traders are not concerned about “why” moves happen on the chart, only that they happen.
I am a technical trader who trades a 100% rules based trading strategy.
The Hybrid Forex Trader
This might sound like the best approach. After all, if you only take trades that make sense fundamentally and technically, you should win a lot more, right?
Here is something important to understand…
No matter which trading approach you choose… there will be losing trades.
Here’s the thing…
If there are going to be losing trades to contend with, no matter which type of trader I became… why not trade the simplest way possible?
I know people hate to lose trades. So, do I. But the only thing that would make me hate them more is to spend 20 years studying economics and 18 hours a day watching news… and losing trades anyway.
You see, I have a rule. It is essential my earnings from trading exceed my trading efforts. The easiest way to make sure this happens is to keep my trading as simple and straightforward as possible.
That is why I am a technical trader. I trade a strategy that allows me to trade in 1 minute a day. And since the profit potential is extremely high… why would I want to spend any more time than I have to?
Forex trading does not consume every moment of my day. It is just something I do consistently to accumulate wealth faster.
Another way Forex traders are classified is by the strategy they use, which determines how long they are in the market…
There are 4 types of Forex traders:
Scalpers: Scalpers look to capitalize on a very small move in the market… and therefore are only in the market for a few seconds or minutes.
Day Traders: Day traders don’t plan on holding their position overnight… and therefore look to make all their profits during the trading day.
Swing Traders: Swing traders look to profit on price “swings” in the market. In order to capture larger profits, they can be in the market several days or even weeks at a time. (This is the kind of trader I am).
Position Traders: Position traders tend to focus on fundamental analysis and can be in the market for weeks, months or even years.
The sweet spot for me is trading once a day off the Daily charts. It is very easy, only takes about 1 minute a day and the profits are extraordinary… even more so when you take into account the minimal time and effort put into trading.
This is a very important concept…
I am a technical swing trader. But that does not mean I absorb every single bit of information about being a technical swing trader and apply it to the Forex market. I don’t learn every single swing trading strategy and try to guess which one will work best in the upcoming live market conditions.
The truth is, I simply trade a simple, rules based strategy on the Daily charts that looks to profit on swings in the market. And I trade this same strategy through all market conditions… without fail.
You see, my success is more about my approach to trading and focusing on strategy rather than ME as a trader. My role is simply to trade my strategy as perfectly as possible. This is very simple and only takes 1 minute a day.
I think it is very important for both my profits AND my mental sanity to keep my trading about the strategy… instead of making everything about me. So, I take the “me” out of the trading decisions.
A lot of people think they need to absorb every bit of information about Forex trading so they “become” a trader. This makes their success about THEM, and how well they apply what they’ve learned to the market.
In my opinion, this is a big mistake.
This concept is so important, I want to talk about it a little more.
I hate to do this, but it does exemplify my point quite nicely.
Let’s compare being a Forex trader to being a gambler.
Gamblers believe if they have enough skill and luck, they can beat the house. They need this high level of skill (and luck on their side), because the odds are always against them.
The more bets a gambler makes… the more likely the odds are going to catch up with then and the house wins.
On the other hand, the casino is NOT gambling. Since the odds are in their favor, they will always come out on top in the long run. They don’t need to win every roll of the dice or spin of the wheel.
The casino always ends up on top as long as the gambler keeps placing bets.
I don’t look at my trading activities the way a gambler looks at betting. I don’t need to rely on superior skill or luck to be profitable.
Because I strategically design the way I trade Forex the same way a casino strategically designs their games. I put the odds in my favor so I am profitable over the long term. All I need to do is keep trading and sticking to the rules.
And I do mean HIGHLY profitable compared to other investment opportunities:
As you can see, strategic planning is better than skill.
We’ve gone over many different types of Forex traders:
- Fundamental, Technical and Hybrid Forex Traders
- Scalpers, Day Traders, Swing Traders and Position Traders
- Forex Traders Focused On Skill and Strategically Designed Success
But when it comes right down to it, there are only 2 types of Forex traders that matter:
- Profitable Forex Traders
- Unprofitable Forex Traders
Hey, if you are a profitable scalper who places 30 trades a day… good for you.
If you make money by spending 14 hours a day trading… go for it.
A fundamental Forex trader that only places 1 trade every 6 months… more power to you.
The point is to become a PROFITABLE Forex trader.
Once I knew I could trade Forex profitably, I wanted to get the most out of my trading. After all, if I’m going to invest my own money to make more money… I want to make the most money possible for my efforts.
Makes sense, right?
Luckily, this led me to creating a way of trading that is extraordinarily profitable compared to other investment opportunities. And the fact it only takes 1 minute a day, 5 days a week is just icing on the cake.
Many people ask if my success is due to a magic indicator, or secret loophole or insider information. Absolutely not. As a matter of fact, I attribute the majority of my success to making the correct decisions about what type of Forex trader I wanted to become.
Most of these decisions I go over right here on this page.
Technical Trader: I trade what I see on my charts and leave all the news and fundamental assessment (guessing) to the talking heads on TV.
Swing Trader: I take what the market wants to give me, when it wants to give it to me. I can catch “swings” that are 3 times, 5 times and even 10 times my risk.
Strategic Trader: My trading decisions are based on set in stone rules, and not dependent on what I “think” is going to happen in the market.
Profitable Trader: I outperform other investment opportunities so I can accumulate wealth faster, build multiple income streams and secure my financial future.
These are the choices I’ve made that are responsible for my success.
Once I figured out how to become the only type of Forex trader that matters (a profitable Forex trader), I wanted to pass this information along.
I’ll admit, this first came about selfishly. I wanted my wife and family to learn to do what I do in case something happened to me. But the good news is, this information can help ANYONE who wants to become the kind of Forex trader I am.
I truly believe the type of Forex trader you strive to be plays a large role in your prospects for success. Choose wrong, and you are almost sure to fail.
The good news is, the type of Forex trader I recommend you becoming is also the easiest to achieve. And with the tremendous profit potential… why make Forex trading more difficult than it has to be.
To Your Wealth,