Trading the financial markets can be full of pitfalls and hurdles.
So many conflicting theories and different advice to consider… and that’s before you have even opened a single trade.
However, one key that can help you step into the wealth that trading can offer is discovering and accepting what type of trader you are and trading to those strengths.
Types of Traders
Traders can be whittled down into a few common types of personalities.
- You are either long term or short term trader
- You are both long term and short term trader
- You are a day trader.
When I started trading, I was predominantly a long term trader. My positions stayed open for months at a time and were then rolled over.
I still am a long term trader. I tend to buy actual stocks now and spread bet a little less over the long term.
However, writing this blog is what helped me develop as a shorter term trader too.
I don’t actually need to trade short term from a financial perspective. The fact is that I have enjoyed the challenge of learning how to trade shorter term and also enjoy helping others learn the ropes of short term trading.
But what advice can I give you to start trading or improve your trading from this point today?
Decide on what kind of trader you want to be and stay with it, or accept what trader you are and trade to those advantages.
Obviously you may not know what type of trader you are at the moment. So I’ll give you some examples of the different options above. You’ll then have a clearer picture of what will or may suit you.
Long Term Trader
The long term trader will look to hold multiple positions for months and years. They will take long term spread bet contracts and also buy and hold stocks.
The Long term trader has no pressing engagement to create immediate wealth.
They are delighted to make 30% a year. If they only made 10% they’d still be more than happy.
Long term traders are calm and relaxed when thinking about their portfolios.
The Long and Short Term Trader
The Long and short term trader will look at holding some positions for a points profit target or until various technical indicators give a signal to exit a trade over the short term.
These traders will look at trading over days and weeks, with trades occasionally slipping into a month or more on the short term.
They will buy stocks and ETFs to hold long term and balance their portfolio.
Some of these traders can do exceptionally well, but they are far and few between. Most are far better off just trading long term, but rarely realise it.
The shorter term trader may trade a single indice or multiple forex pairs. Maybe even a combination of both.
They will be looking for quick gains
They rarely trade individual stocks.
Their trading style is full on and they will be busy at trading throughout the day.
Cast iron discipline is needed to be profitable in the day trading arena. Day traders also need the ability to follow a strategy without any sort of deviation what so ever.
Most day traders lose money and are rarely prepared for the reality of financial trading.
Day traders often blow their entire bank within 3 weeks.
Trade to Your personal Strengths
Obviously the above personalities are examples, but they are quite accurate from my experience.
Trading success starts with YOU and the foundations you lay. You need to decide on what you want to achieve from trading before actually starting trading using funds.
Plus, you’ll often find the reality of trading is far different than what you expect. So you will need to adapt and be ready to do so when called for.
Trade to your personal strengths and remember that the style of trading that suits YOU best is the one that makes YOU money… regardless of being long or short term.