Academy

What kind of trader are you?

10 questions about how you like to work, not about what you know. The answers fill a dial with five spokes, and the result describes the style of working they lean towards.

Start the questions

This is a description of preferences. It is not an assessment of suitability or of ability, and it is not advice. Most people who trade with leverage lose money, whatever their style, and one honest result of these questions is “investor, not trader”. Educational information, not investment advice or a recommendation to trade.

The style dial

Ten answers, five spokes.

Choose the answer nearest to you. There is no right one, and you can go back. The dial moves with each answer.

Nothing is answered yet, so the dial is empty: five spokes, one for each style of working.

Each answer adds two to the style it names and one to the styles beside it; a spoke’s length is that total over the most it could be. A tie is given to the slower style.

The five styles

Told apart by how long a position is held.

The names are ordinary ones and the boundaries between them are loose. What changes from one to the next is the time a position stays open, and with it the attention needed and the cost that weighs most.

The five styles of working compared: holding time, attention and main cost
Style	A position is held for	Attention it asks for	The cost that weighs most
Scalper	Seconds to minutes	Unbroken, for the whole session	The spread and commission, paid many times a day
Day trader	Minutes to hours, closed the same day	Several hours, in the active part of the day	The spread on each trade, and the hours
Swing trader	A few days to a few weeks	A look once or twice a day	Overnight financing, and gaps past a stop
Position trader	Weeks to months	A review once or twice a week	Financing over months, and long drawdowns
Investor, not trader	Years	A few times a year	Fund and dealing charges, and years of waiting

Holding times are the usual meanings of the words, given as ranges. They are not rules, and no figure here is a statistic.

Scalper

Holds: Seconds to minutes · Attention: Unbroken, for the whole session

Many very short trades, each aiming at a small move and closed within seconds or minutes. Nothing is left open when the session ends.

What it demands

Unbroken attention for as long as the session lasts. Looking away is not part of the method.
Decisions made in seconds, by a routine fixed in advance rather than thought out each time.
Fast, reliable execution, and the discipline to stop when the routine stops being followed.

What it costs

The spread and any commission are paid on every trade. Against a target of a few pips they take a large share of each result, so costs matter more here than in any other style.
Slippage: in a fast market the price filled is not always the price clicked, and a small target leaves little room for it.
Fatigue. Hours of concentration are a cost, even though no statement shows it.

Where it goes wrong

One loss left to run undoes many small gains. The arithmetic of small targets is unforgiving of a single large mistake.
Overtrading: taking trades because the screen is open, not because the routine calls for one.
Raising the size to make small moves ‘worth it’, which raises the loss on the trade that goes wrong by the same amount.

Day trader

Holds: Minutes to hours, closed the same day · Attention: Several hours, in the active part of the day

A few trades a day, each opened and closed within the same session. The day ends with nothing open, so nothing is carried overnight.

What it demands

Several hours at a screen during the busy part of a session, on most working days.
A plan made before the session opens: which levels matter, what would be traded and what would not.
The willingness to finish a day having done nothing, when nothing fitted the plan.

What it costs

The spread and any commission on every trade. With a few trades a day they add up over a month.
No overnight financing, because nothing is held overnight. The price of that is time: this is close to a second job.
Scheduled news can move a price a long way inside one session, and a stop may be filled worse than its level.

Where it goes wrong

Forcing trades on a quiet day because the hours have been set aside for it.
Trading again at once after a loss, to win it back before the close.
Holding a losing position overnight ‘just this once’, which turns a day trade into something that was never planned.

Swing trader

Holds: A few days to a few weeks · Attention: A look once or twice a day

A handful of trades a month, each held for days or a few weeks to follow one move. The work is done away from the live price, usually on daily charts.

What it demands

Patience to leave a position alone for days, through moves against it that are within the plan.
A stop far enough away for the timeframe, and so a smaller position for the same risk.
A short, regular routine, morning or evening, rather than hours of watching.

What it costs

Overnight financing (the swap) is charged or paid for each night a leveraged position is held, and it adds up over weeks.
Gaps: a market can open after a weekend or after news at a price beyond a stop, and the stop is then filled at the worse price.
Fewer trades, so each result matters more and a run of losses takes longer to see clearly.

Where it goes wrong

A stop set as tightly as a day trader’s on a trade meant to last a week. It is hit by ordinary movement.
Watching the position hour by hour and closing it on noise the plan had allowed for.
Carrying several positions that are really the same bet, so that one move hurts all of them together.

Position trader

Holds: Weeks to months · Attention: A review once or twice a week

Very few trades, each held for weeks or months on a view about an economy, a policy or a long trend. Day-to-day movement is treated as noise.

What it demands

A reasoned view of the larger picture, and a clear statement of what would show it to be wrong.
A wide stop and therefore a small position: large swings against the trade are expected along the way.
A great deal of patience. For long stretches the right action is none.

What it costs

With leveraged products, financing is charged for every night. Over months it can become a large part of the result.
Margin is tied up for the whole period and must survive the swings in between.
Being wrong is expensive in time as well as money: it can take months to find out.

Where it goes wrong

A short-term trade that went wrong, renamed a ‘long-term position’ to avoid taking the loss.
Leverage too high for the size of the swings, so that a margin call closes the trade before the view is tested.
Holding on after the facts behind the view have changed.

Investor, not trader

Holds: Years · Attention: A few times a year

Buying assets to own for years, usually without leverage, with little interest in timing. This describes someone who does not want to trade at all, and that is a complete answer.

What it demands

A horizon measured in years, and money that will not be needed in the meantime.
The ability to watch a holding fall a long way and stay down for a long time without acting on it.
Very little screen time, and the discipline not to turn checking into trading.

What it costs

Dealing, fund and custody charges, which are small each year and compound over many.
The value of an investment can fall as well as rise, and may be below what was paid for years, or at the end.
Leveraged products charge financing for each night held, which over years is a heavy cost: they are built for shorter holding periods.

Where it goes wrong

Selling during a fall and buying back after the recovery.
Too much in one company, one sector or one country.
Drifting into frequent trading because prices are easy to check.

What the quiz cannot tell you

A preference is not an ability.

The questions ask what you would like and how you think you would react. People are often wrong about the second. Saying you would stop for the day after a loss is easy; doing it with money gone is a different matter.

A style also has to fit a life: the hours free, the money that can be lost without harm, the other calls on attention. The quiz knows none of that. It cannot say whether trading suits you, and it does not try.

Whatever the style, leverage enlarges losses as much as gains, and most people who trade with leverage lose money. A style changes how the costs arrive. It does not remove them.

Questions people ask

About trading styles

What are the main styles of trading?: They are usually told apart by how long a position is held. A scalper holds for seconds or minutes, a day trader closes everything within the day, a swing trader holds for days or a few weeks, and a position trader for weeks or months. An investor buys to own for years and is not really trading at all.
Does the result tell me which style I should use?: No. It describes the preferences given in ten answers and names the style they lean towards. It is not an assessment of whether trading is suitable for you, it does not measure ability, and it is not advice.
Is one trading style more profitable than the others?: No style is presented here as profitable. Each has its own costs and its own usual mistakes: frequent trading pays the spread many times, and holding for longer pays overnight financing and is exposed to gaps. Most people who trade with leverage lose money, whatever their style.
Are my answers saved?: No. The answers are held only in the open page, to draw the dial and name the result. Nothing is stored in the browser and nothing is sent anywhere. Reload the page and they are gone.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose.

Continue

Fetching the page

Style

A position is held for

Attention it asks for

The cost that weighs most

Scalper

Seconds to minutes

Unbroken, for the whole session

The spread and commission, paid many times a day

Day trader

Minutes to hours, closed the same day

Several hours, in the active part of the day

The spread on each trade, and the hours

Swing trader

A few days to a few weeks

A look once or twice a day

Overnight financing, and gaps past a stop

Position trader

Weeks to months

A review once or twice a week

Financing over months, and long drawdowns

Investor, not trader

Years

A few times a year

Fund and dealing charges, and years of waiting

About trading styles

What are the main styles of trading?

They are usually told apart by how long a position is held. A scalper holds for seconds or minutes, a day trader closes everything within the day, a swing trader holds for days or a few weeks, and a position trader for weeks or months. An investor buys to own for years and is not really trading at all.

Does the result tell me which style I should use?

No. It describes the preferences given in ten answers and names the style they lean towards. It is not an assessment of whether trading is suitable for you, it does not measure ability, and it is not advice.

Is one trading style more profitable than the others?

No style is presented here as profitable. Each has its own costs and its own usual mistakes: frequent trading pays the spread many times, and holding for longer pays overnight financing and is exposed to gaps. Most people who trade with leverage lose money, whatever their style.

Are my answers saved?

No. The answers are held only in the open page, to draw the dial and name the result. Nothing is stored in the browser and nothing is sent anywhere. Reload the page and they are gone.