There are many strategies and type of traders having their own advantages and disadvantages, while we will briefly analyze below the most common ones.
Scalpers are traders who enter and exit the market within a short period of time. They usually track and find small market movements while they either open a few big volume trades or many small volume ones. Using fast paced trades, they can lock some profits without leaving the positions open for a long time.
News traders are like scalpers. As their name implies, their strategy focuses on the announcement of financial news and events which can affect the whole financial market or a country and a trading pair specifically. One of the most common dates for all news traders is the 1st Friday of every month, where the Nonfarm Payroll (NFP) is announced for the USA and has a great effect on the forex market.
Robo-trading is an automated strategy where traders apply special software to their trading platforms. The actual trading and positions’ opening and closing is done by the software itself without any human intervention. This software is also called Expert Advisor (EA), while there are plenty of EAs in the market, others free and others having prices of more than $1000. Each EA has its own settings and parameters to be specified by users/traders. Automated trading should be tested carefully since there are many examples and clients who lost all their funds due to a small malfunction of the applied software.
The name is straightforward and explains exactly the nature of this specific trading style. Using this strategy, traders open and close positions within the same day. They usually try to capture short term movements while at the same time they avoid being charged swaps, since trades do not pass the overnight limit.
Swing traders check trends while they try to follow them to the highest level possible. They can trade either within a day or leave a position open for several days. Everything depends on the breakdown of a trend, support and resistance levels.
Position traders are looking for major market trends. They usually open a trade and leave it for quite a while (more than one week). This is a long-term trading strategy which analyzes financial data, news, technical and fundamental inputs. Small price movements are not in the scope of this trading style, while orders can be left open for months trying to catch maximum profits and trends.
It is important to note that each trading strategy needs to be tested again and again before a trader decides to adapt it to a live trading environment. Many trading platforms offer back-testing capabilities so traders can check how a strategy performs using past data and price movements.