Scalper is a workable profile for a small retail trader. However, you should be able to view the overall trend of the market to gauge whether you are trading with or against the prevailing trend. A scalper is also a seeker of short term profits of the level of 25-50 pips.
A scalper is also a seeker of short term profits of the level of 25-50 pips. A scalper might use a 10 minute chart to follow the market, a 1 hour chart to determine the long term trend and the 5 minute chart to time the entries and exits for each trade.
Day trader is a good profile for a new trader. However, sometimes you might not want to close the trade at the end of the day as the trade is in profit and you are expecting more profits if you continue with the trade overnight. There is a rollover cost if you rollover your trades overnight. Be sure if you want to day trade, you know your broker policy on rollovers and the rollover cost for you. A Day trader is looking for larger profits something like 50-100 pips.
However, sometimes you might not want to close the trade at the end of the day as the trade is in profit and you are expecting more profits if you continue with the trade overnight. There is a rollover cost if you rollover your trades overnight. Be sure if you want to day trade, you know your broker policy on rollovers and the rollover cost for you. A Day trader is looking for larger profits something like 50-100 pips. A Day Trader might use a 15 minute chart to follow the market, a 4 hour chart to determine the long term trend and the 5 minute chart for making the entry and exit.
Position trader is a risky and difficult profile for a part time or new trader. The longer you hold the position, the more you are at risk of getting the market surprises that no one can predict. A market surprise can be a sharp change in direction or volatility often occurring as the result of a major surprise announcement.
If you aim for a 1/3 risk/reward ratio, a Guerilla will risk 5-10 pips per trade, a scalper will risk 15-20 pips per trade, a day trader will risk 25-30 pips per trade and a position trader will risk 40-50 pips per trade. Each profile requires different scales of charts and time frames but also indicators and money management parameters.
Always try to maintain a risk/reward ratio of at most 1/3. This means the chances are 3 to 1 that you are going to make a winning trade. In other words, in the long run, you will have 3 winning trades for each losing trade. If you aim for a 1/3 risk/reward ratio, a Guerilla will risk 5-10 pips per trade, a scalper will risk 15-20 pips per trade, a day trader will risk 25-30 pips per trade and a position trader will risk 40-50 pips per trade. Each profile requires different scales of charts and time frames but also indicators and money management parameters.
Even if two trader s use the same charts and technical indicators they might interpret them differently. The differences in money management techniques and attitudes are much less. Good traders tend to share money management and attitude traits. So do bad traders. Do you want to become a good trader or a bad trader? Always keep in mind that in forex trading a 10 pips move up or down can easily occur within seconds or minutes very quickly without any reason or rhyme. No two traders can be exactly alike.
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