What type of a trader are you?

Trading the markets can be as much about finding the right trading style to suit your personality as picking the right trades in the right markets. Before you start buying and selling positions, do you really know what type of a trader you are?

There are numerous types of trader, with each is different in terms of strategy (long or short-term) and the level of risk you are prepared for. There are also time frames you might find yourself trading with, like day trading, swing trading or long-term investing. Determining what kind of trader you are and whether you are into spread betting, CFDs, forex or stocks means understanding how much free time you actually have and how you tend to think.

If you decide the best option for you is day trading, you’ll need plenty of time throughout the day to open and close positions as they become apparent. Some might be held for just a few minutes and others for the entire duration of the day. If you can only work on the weekends, then it could be that you are better suited to the role of a position trader, where trades can be held for weeks or months at a time.

Naturally, the time you have available is going to heavily influence which market is best for you. If you’re someone who can constantly monitor positions throughout the day (and night) then you could be a scalper. This involves rapid analysis of the markets, taking advantage of executing lots of trades for short-term profit (or for cutting losses). A scalper is best suited to the forex or indices markets where small price fluctuations constantly occur, whereas a news trader will wait for breaking news, analyse the reaction of the market and then trade accordingly.