Pros Cons Trader Type By Time Position
A novice trader who is just starting out in the forex market is often unprepared for the risks that will be faced and eventually undergoing a general trader cycle, that is, first traders jump in like heads first, they usually lose the first account and then they give up, or they do not kapok and do a little research (learning) and open a demo account to practice.
Beginner traders often do this by opening other real accounts and it is possible to experience little success and even profit.
In choosing a strategy, beginner traders are always advised to be a medium-term trader type. Why not a long-term or short-term strategy? Let’s look at the Pros and Cons of Trader Type by time position.
Short Term (Scalper)
A trader who looks to open and close trades in minutes, often takes advantage of small price movements with large amounts of leverage.
Pros: Rapid realization of profit or loss due to the fast nature of this type of trading.
Cons: Large capital and / or risk requirements due to the large amount of leverage required to benefit from the small movement.
This type of trader usually wants to hold positions for one or several days, often taking advantage of opportunistic technical situations or looking at technical opportunities (swing, breakout, etc.).
Pros: The lowest capital requirement of all three types of traders because of the leverage required only to boost profits.
Cons: Fewer opportunities because this type of trading is harder to find and execute.
Types of traders who want to hold positions for months or years, often based on decisions on long-term fundamental factors.
Pros: Long-term benefits are more reliable because it depends on the fundamentals that are reliable.
Cons: Large capital requirements to cover fluctuations in open positions.
Now, you will see that both short-term and long-term traders require a large amount of capital. The first type needs it to produce sufficient leverage, and the other covers the volatility. Although both types of these traders exist in the market, they are often held by high value individuals or larger funds. For this reason, retail traders are most likely to successfully use medium-term strategies.