Different types of Trader

Published in

Coinmonks

5 min readOct 31, 2021

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There are different types of traders. A scalper can be bullish on his system and be profitable. At the same time, a positional trader may be bearish and still be profitable. A common method for distinguishing one type of trader from another is for how long a trader holds an instrument — a variance that can range from a few seconds to months or even years.

In this article, I try to explain in my own words the different types of traders.

Scalper

A scalper

Trades on the lower timeframe.
Hardly concerned about the overall direction of the coin
More concerned about whether the price will go up or down in the next few minute or hours or the maximum day. He is into quick gain.
Uses price action a lot
Uses tools like order book etc
Will sometimes add different indicators for his decision making as an added confluence.
Will be quick in entering and exiting the market.
Tries to maintain very strict high r/r
Likely undertakes a large number of trades in a given month.

Day Trader

A day trader

takes predefined days off (such as weekend etc)
has a very disciplined trading strategy
uses 1 day timeframe or 4-hour timeframe often
quite often holds for more than a few hours and sometimes for the whole trading session
quite often will close his trading before going to bed
may have less number of trades than scalpers
may still have a significant number of trades
considers trading as another source of income/career

Swing (Local Trend) Trader

A swing trader

uses technical analysis to follow and profit off trends
the timeframe is intermediate-term, often a few days to a few weeks.
tries to find local major top and bottom
uses tools like liquidation levels, trendlines, price actions and different indicators like divergence, etc.
studies resistance and support, Fibonacci extensions occasionally combined with other patterns and technical indicators.
loves volatility as it gives rise to opportunities.
might short a coin even if it is bullish in the more significant higher timeframe
more concerned about the next few days to a week
not concerned on the overall direction that the coin may be making in the weeks to months

Positional (Macro Trend) Trader:

A positional trader

ignores short-term price movements and prefers to rely on more precise long-term trends
less concerned with short-term fluctuations unless they can impact the long-term outlook of their position
takes both long and short sides of trade depending on the long-term trend
usually holds coin for weeks to even months after evaluating the market wind
does not actively trade but keeps an active interest in the market
trades according to the macro direction of the market
has to be very accurate in determining the overall macro direction of the market for the next few weeks to months
may not trade more than a few trades every year with a considerably more significant profit percentage per trade
has a fixed mindset of how big of a drawdown the coin might endure
amount invested per trade is usually of significant amount since the number of trades per year is small
uses indicators, such as Jasmine or Aladdin, that show the market direction for the next few months rather than the next few days
Time invested is highly valued here. Patience is highly needed here

Advantages of positional trading

It is a long-term strategy that can lead to big percentage gains per trade.
There is less stress for the trader than short-term strategies because positions don’t need daily monitoring.
Risk is usually lower than swing or day, or scalping since stop loss and target profit are significantly more widespread.

Disadvantages of positional trading

Capital is locked for an extended period.
Boring
Funding fees can eat up a significant amount of the profit.
Multiple bad trades can have a significant negative impact on the capital. Hence, the accuracy of each trade needs to be higher.

Cycle Trader

A cycle trader relies on the way a coin behaves in a cycle. I have an entertainment article on how Bitcoin may behave in a cycle. It is a very passive way of trading.

Buy and Hold

A buy-and-hold trader only makes long trades. They buy and hold until the market turns bearish.

HODLER

A holder buys a coin assuming the coin will have a significant amount of appreciation in the long run of a decade or longer. He HODLs (Hold for dear life) even if a substantial amount of drawdown happens. The capital is locked out for a significant amount of time.

Disclaimer: Please remember that past performance does not be indicative of future results. Different types of investments involve varying degrees of risk. There can be no assurance that the entertainment information referred to directly or indirectly in this newsletter (article) will be profitable, equal to any corresponding indicated historical performance level(s), or be suitable for you in any form or shape. Due to various factors, including changing market conditions, the content may no longer reflect current opinions or positions. Moreover, it would be best if you did not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from your financial advisor. I am not a financial advisor. I have no qualifications to be a financial advisor. It is only for entertainment purposes. Do not misuse it in any other way. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above, he/she is encouraged to consult with a professional advisor of his/her choosing. Neither I nor my indicators take any responsibility for any misuse of the information for any actual trading. I do have crypto positions in real life.

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