Which Trader Are You?
Trading Style by Personality Type
Yet another gem from the underestimated art of trading psychology - different trading styles by personality types, can go a long way to help you pick your trading strategy and understand why some fellow trader’ styles don’t seem to work as well for you. Let’s take a look!
1. Day Trading
If you are the type of person who can’t sleep soundly knowing you have open positions, this may be the style for you! Day trading means operating solely on intraday market price action with a typical morning-open, evening-close scenario.
2. Swing Trading
If you are calm and patient, yet still look for comparatively short-term profits, you may find swing trading a fit. Here, trades are kept overnight, from a few days to a few weeks. It’s wise to note, however, that this strategy typically requires a larger stop loss, so being able to keep a cool head when a trade goes against you is a must.
3. Position Trading
Position traders hold their positions from weeks to months or even years. In fact, an average position trader places less than 10 trades a year! Needless to say, it’s a style requiring an endless amount of patience, as well as an ability to ignore popular opinions and go through cycles and cycles of bull and bear moods. Not for the faint-hearted!
With scalping, positions are opened and closed within minutes, or sometimes even seconds, adding up to hundreds of transactions per day, with trades often open in opposite directions! Basically, profits are made from frequently-occuring price changes. The idea of “letting profits run” doesn’t apply here. The primary focus lies on making as many small trades as possible.
Regardless of the trading style you choose, it’s most important to keep the balance! Know when to quit when a trading style doesn’t seem to be working for you, yet have the patience to stick with it for a while to see it perform optimally.