Not everyone has the same goals.
Some people are running other businesses, doing it as a side hustle while for some of you, it will be a full-time occupation.
Because of the different interests in the market, there are different types of traders.
The difference doesn’t come because of different strategies.
Different goals, intentions, available time are the reasons why some traders are doing it full-time.
On the other side, some people are doing it as a side hustle.
Most importantly, both of them can perform well and generate profit in the market.
The results don’t reflect the number of hours you spent in front of the trading desk but rather the quality of your trade and money management.
Here is the list of different types of successful traders in the market.
The number of different types of unsuccessful is infinite; that’s why we are here to study and learn from successful traders.
The strategy of the scalper is focused on extremely low timeframes.
Two timeframes that they use for trend direction are H1 and H4.
The time frame for the setup is usually M15.
For some of them, the setup may form on H1 timeframe as well.
The entry confirmation happens on the M5 timeframe, and sometimes it goes even lover to M3 or M1.
They are full-time traders because to manage these trades, you need to monitor them constantly.
They usually end up entering between 10 and 20 trades a day.
Exposure to the market is minimal.
They usually spend from a couple of minutes up to an hour in a trade.
The biggest drawback is the fact that every time they enter and exit trade, they will be paying fees.
The amount of fees they will pay is exceptionally high, and it seriously impacts the final result.
But because they trade a lot, their trading volume is extremely high, so they usually find the exchanges/brokers that offer a discount on fees for those with high trading volume.
The broker loves those that trade a lot because they bring liquidity to the market that generates the profit for the broker.
The second drawback is the free time you will have.
As a scalp trader, you have to be in front of your trading desk all the time whether in a trade or preparing to get in a trade.
The day trader
The main focus of a day trader is intraday price action.
He usually checks the market the night before and marks potential setups.
When he wakes up the next day, he is waiting for entry confirmation.
The relevant timeframes for trend direction are daily and H4.
Some of them will even try to look at weekly to get an overall trend direction, but the main focus is on H4 and daily timeframe.
The setup usually forms on H1 or H4 while the confirmation occurs on M15 or H1.
Same as the scalp traders, they have to monitor price action to enter the trade when confirmation happens.
You can be working something else at the same time because the full focus is not on a trade.
However, alerts should be on so you can react fast once confirmation happens.
The day traders do not hold the trade overnight. They usually close it over the day or before the day ends in either profit or loss.
The swing trader
The main interest of the swing trader is trend direction established on higher timeframes (weekly).
The weekly timeframe (sometimes daily) will give you the trend direction.
Your task as a swing trader is to find setup on lower timeframes ( H4 or daily) to get profitable entry opportunity.
The timeframes for confirmation are usually H4.
As the confirmation happens on the H4 time frame, you are not attached to your trading desk all the time.
You usually do the weekend preparing for the week ahead, marking potential trades and then throughout the week, you will wait for setups and entry confirmation to execute the trades.
This could be done on your phone so that the swing traders can have other business apart from trading.
The trading can be the side hustle you use for generating more profit.
As you won’t be entering a lot of trades, the amount of fees you are going to pay as a swing trader is not going to be too high.
That is one more positive side of this type of trading.
The position trader (investor)
Apart from trend direction, the position trader (we like to call them investors) look at fundamentals closely.
We all know that the fundamentals are controlling trend directions.
They are not happening so often that’s why for a day trader it is not that important. But for an investor, fundamentals play a significant role (we would say the primary role).
They are also following the technicals and the confluence between these two analytics but to consider something profitable, the first thing they check is the fundamentals.
Then if they see potential trend direction based on fundamentals, they will look at technicals to see if they can find the alignment between these two.
If they spot an alignment, they switch to lower time frames (for them the lower time frame is daily) to look for entry opportunity.
The type of trader you are going to become depends on your own choice.
Do not think if you open more trades, you are going to make more money.
That’s the fallacy the majority fell into.
No matter if your choice will be a scalp trader or an investor, make it fit your life.
If you are at a job, maybe the best option for you is to start as a swing trader and slowly develop into a day trader.
We wouldn’t suggest anyone being scalp trader because it is time-consuming and you need a lot of knowledge to do it.
The professional scalp traders are usually those with 10+ years of experience that have a big portfolio, so they make scalping one of the ways of growing that portfolio.
Apart from scalping, they usually have the swing or position trades active.
They also have high trading volume, which makes their fees very low, so it won’t affect the overall score.
The combination of a day trader and swing trader, in our opinion, is ideal.
You will still have time to work on your other businesses, but when there is an opportunity in the market, they will take daily trades and book the profit on the same day.
On the other side, if there is potential for price to go further in their direction, they will keep it for several days and extract the maximum from that trade.
Again, it is you that will be trading so make sure that the style you will choose fits you.
For more the content of ours, check out the links below.
Milos is an independent trader, with a background in journalism and publishing. Nomadic by nature, he’s lived in four different countries this decade. He’s fascinated by Blockchain technologies’ potential to reshape all aspects of our lives. Milos got into Bitcoin while completing his degree and hasn’t looked back since, writing about anything crypto-related. He is the co-founder of the Cryptoaims and he has a strong passion to educate people about this revolutionary technology.