When trading forex on a platform such as Rakuten forex trading, timing, guts, intelligence, and instinct are the factors that separate good forex traders from great ones. Timing is the most important factor4 when it comes to forex trading. There are different time frames for trading. These time frames make it possible for the traders to execute their strategy and develop their idea. Timing also makes it possible for trading experts to consider factors such as currency pair mishaps, effects of news on the market and also position leveraging which are all out of the trader’s control. This is why timing is a major factor, one mostly ignored by novice traders.
There are plenty of terms used to describe different types of FX trading Australia traders. When time, the most important factor is considered, traders can be categorized into 3 common categories. These categories include a day trader, position trader and swing trader.
The day trader
Just as the title depicts, a day trader is typically a type of forex trader who trades for the day. These types of trader avoid holding on to any forex pairs after the session closes. They are also known to trade in high volumes.
On a typical trading day, a day trader generally aims for quick turnover rates on a single trader or a few. This turnover can be anywhere between 10 to 100 times more than the normal transaction size. They do this to ensure that make the most profit from small swings. For this reason, day traders tend to make use of short time frame charts making use of one, five or fifteen minute periods.
A day trader also relies heavily on technical trading patterns and prefers volatile pairs which stand a better chance of giving the, higher returns. While long terms trade options may be more profitable, day traders are always after short-term opportunities.
The position trader
This is the longest time frame trader amongst the three types. This trader is different from the other two because of his perspective of the forex market. Unlike the day and swing trader who are interested in short-term market gains, the position trader is more interested in long-term trading plans.
A position trader’s strategy looks at what they can gain in weeks, months or years. While they may be interested in the technical formation, they are more geared towards long terms opportunities and models.
These types of forex portfolio managers will look into economic models, interest rates, and government decisions to help them in making their trading decisions. These considerations place this trader in the major currencies position for currencies considered to be liquid. This can include most of the G7 currencies and also upcoming market favorites.
Whichever trader you are, time frames are the most important factors to consider. Without properly considering the time frames, your strategies no matter how good they are will almost always not work. Working with the right time frame for the type of trader you are can make a difference even for the most novice Rakuten trading account holder.
The swing trader
These are traders who take advantage of longer time frames. The swing trader will hold a position for a few hours, days or longer before they can call a turn in the forex market. Swing traders are usually looking for profits from market entries while hoping that there will be a change in direction to benefit their position. This makes timing a very important factor in the life of a swing trader. Swing traders also have a liking for fundamental and technical forex analysis.
A smart Rakuten forex swing trader will most likely trade in more liquid currency pairs such as the £/$ pair. A swing trader is also able to capitalize on a double bottom which may follow a drop in the GBP/USD pair. The entry would likely be placed on a test of support which makes it possible for the trader to capitalize on any direction change trend.