Forex trading has been around for so many years. But for long, it is only available for huge financial institutions such as commercial banks, hedge funds, and money managers. But when online trading was introduced to the general public, retail traders and investors started to join the market and became a huge population in the Forex market.
A retail investor is an individual investor that is directly or indirectly participating in the market and doing transactions on industries like bonds, stocks, commodities, and other financial instruments. They are the people who are using trading platforms like MetaTrader 4 and are involved in ETFs and mutual funds.
Different Participants in the Forex Market
The financial market is made up of many participants, trying to take advantage of even the slightest movement in the market. Some of the financial instruments are the Forex market, derivatives market, and stock market. Each of these markets has its own player or parties participating in the speculation of price movement. There are banks, governments, asset management firms, and other financial institutions.
Institutional Investors – they are large corporations like insurance companies, banks, hedge funds, mutual funds, and government-run funds.
Foreign Institutional Investors – they are made of corporate bodies situated abroad.
High Net Worth Individuals – they are the investors who have a huge capital for investment.
Retail Investors – they are individual traders who are investing in the market using small capital. For instance, in Forex trading, retail traders can join the market with a capital as low as $50.
Different Types of Retail Trading Strategies
Only a very small portion of retail traders take trading as their professional profession or their main source of income. Other market participants see this opportunity to earn as a passive income and not a long-term one. They may fall into these categories.
Scalping – traders in this category are actively involved in the market and doing trades on a daily basis. They are also known as professional traders. Scalpers are those individual traders who are taking advantage of the smallest price movements in the market. This job is considered high pressure because you have to act fast before a good chance to open or close a trade passes by.
Intraday Trading – traders in this category are highly involved in the market on a full-time basis. Compared to scalpers they have less stress on them. They take advantage of the market on a daily or hourly basis.
Swing Trading – they are traders who are holding security positions for a week or more. They hold positions in a much longer period than the ones mentioned above. They are eager to take advantage of the market out of a higher movement in the market.
Position Trading – they are the traders who refuse to take part in the daily activities in the market. They may wait for a couple of times to realize their profits but usually book higher profits despite the longer holding periods.
Before starting to trade, you may want to check on these trading strategies first so you will know which one fits you best and the one trading platform like MetaTrader 4 to use on your trades.