WHAT TRADER ARE YOU?

One of the biggest stumbling blocks to me moving ahead in a successful way as a trader was not knowing the type of trader I wanted to be. As a result this meant my approach to trading would have no consistency as I constantly fluctuated between different schools of thought about the approach to trading.

One of the things that I have learned about trading is that there are multiple avenues to success. I have also learned that one person cannot accommodate and be equipped to use all of these multiple avenues to success. Therefore many of the top traders are specialists within particular areas and particular styles of trading. A final point here is that peoples opinions are a result of their experience.

So why do I mention this?

Because I constantly hear people who trade options state that you cant really make money trading equities. I hear people who trade equities state you cant really make money trading options because the majority of options end up expiring. I hear people say you cant make money trading forex because its too volatile and unpredictable. I hear people say you cant trade commodities and futures because they are simply too risky. I hear people say you shouldn't trade penny stocks because they are a waste of time and full of too much scams. I hear people say you cant trade sports because its too random.

There seems to be this trend that those who have found their particular niche seem to then have a bias against other niches.

But the point is this, in every one of these niches there are people making significant money consistently which leads me to the conclusion that many people seem to have a bias which is based on bad experiences they have had in particular niches. But just because you have a bad experience it doesn't mean everyone else will have the same experience.

Some people are good at day trading, others are good at swing trading. Some people are good at dealing with short time frames, others with longer time frames. Some people are successful using Elliot Wave, Fibonacci retracements and other forms of chart trading. Other successful traders don't use charts at all and simply base decisions on price action, statistics and numbers. Some trade technical, others trade fundamental. Some people trade news, others trade momentum, others trade the trend or counter trend.

The choice is endless and can sometimes leave you feeling rather exasperated and not knowing where to turn.

This means that when entering trading you have to decide what works for you and what will resonate with your DNA.

Let me give you an example. I am perfectly aware that whilst I work best with a system that has a "standard win rate/standard return" that there are others who work with "low percentage win rate/significant return" strategies who still are highly successful.

However when I toyed with low percentage win rate/ high return strategies I found that my DNA did not resonate with long periods of losing streaks. If you are using a strategy which only has a win rate of 30-40% you need to understand you could face losing streaks that enter double digits. I know myself I cannot deal with that so I had to make the decision of going with a slightly higher percentage win rate (around 50%) where the losing streaks are more manageable.

But these are the decisions you have to make and the strategy you choose has to resonate with your personality and tolerance for risk and reward.

So the story here is in order to be at peace with yourself in trading and to stop the rut of moving from one system to another and one school of thought to another, know who you are and choose what works for you the best because when you make that choice the level of congruency between who you are in terms of your emotions and psyche and your trading style will provide a better foundation for success to spring from.

 



 


The key to success in trading is the ability to accept losing a battle whilst knowing you are winning the war

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