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 Scalper versus Trend Follower

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painofhell



Male Posts : 668
Birthday : 1990-05-18
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PostSubject: Scalper versus Trend Follower   Sun Jan 17, 2016 4:01 pm

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There are many types of Forex trader but the two which are most divergent are the scalper and the trend follower. The trend follower will spend hours, days or even weeks analyzing trends down to the nth degree and only when he’s sure that the trend will continue or turn in his favor will he execute a trade. On the other hand, a scalper is like a hawk, hovering to take advantage of a small movement in the market.

What kinds of people do these trading types represent?

The trend follower is likely to be a perfectionist with possibly a touch of obsessive compulsive disorder about him. He’s going to execute a trade only when everything is right about it. He is likely not to have too much spare time so he’ll use what he has to investigate a potential trade then, when he is in the market, he’s happy to sit and wait for it to turn to profit which he hopes will be big. If he’s done his job right then he’ll win and whilst he won’t trade often, when he does, he’ll turn a good profit.

The scalper is a different creature entirely. Yes, they’ll look at trends but after a quick scan of long and medium term trends, they’re more interested in the short term trends and are most often found glued to the five and fifteen minute charts. They’ll micro analyze even the minute charts but instead of using tools to do it, they’re more likely to be the ‘sixth sensors’. They can see the patterns as the minutes tick by and wait for the peaks and troughs before committing money. They can set stop losses and take profit points but to a lot of scalpers, that takes time and they’d rather be there, finger on the mouse, to grab a quick hundred or so profit here and there, knowing that at the end of their trading session the regular hundreds will have accumulated into thousands.

Being a scalper takes even more discipline than normal. The temptation is to let trades run if they’re doing well but the ethos of the successful scalper is like the US Navy SEALS; get in, do the business and get out. For them, trades may last seconds or minutes then they’re looking for the next opportunity, scanning the charts and preparing their capital as they tend to trade with a relatively big percentage of their capital at a time

They’ll have keen grasp of the technical indicators from their apprenticeship as trend followers but for Scalpers, trend spotting comes as second nature and even in the minute charts they can spot tops and bottoms by recognizing the price behavior.

Both can be successful traders. Novice traders tend to start out as trend followers sometimes progressing to being a scalper but for many, the calm, methodical approach suits them best and that’s where they’ll stay.

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Scalper versus Trend Follower

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