Greedy Traders: They trade too big and risk too much because their only goal is the easy money. They usually end up blowing up their account.
New Traders: They have no idea how the markets work so their only goal should be knowledge. New Traders do well to stay students until they have done their homework. Rushing in to make money without risk management, a winning method, the right mind set, and a trading plan will result eventually in failure 100% of the time.
Arrogant Traders: Their only goal is to prove they are right and satisfy their fragile egos. Arrogant traders will lie, delete tweets and posts, never admit when they are wrong. When they are wrong they will hide it under a cloak, when they are right they will scream it from the roof tops.
Trend Traders: Their only goal is to ride a trend and make money. Trend traders will buy high and sell much higher, they will short and cover much lower. They look like genius’ and prophets in a trending market either way it trends but they look like they can’t even trade in choppy or whipsawing markets. In the long term they do very well.
Scared Traders: Their only goal is to not lose their capital. Scared traders will immediately close losing trades and also immediately take profits. They are very stressed out in trading due to not understanding the nature of trading itself or just can not handle the uncertainty or risk. They either need to do their homework to develop their faith in or if they have done the homework trading may just no be for them.
Perma-Bull Traders: Their only goal is to go long stocks. Buy the best investment in the best stock.They have no desire to go short they always believe the next big rally is around the corner and love to buy lower and off support levels.
Perma-Bear Traders: Their only goal is to short stocks. They always think the market is on the verge of a major crash. They “know” the economy is in shambles and the markets are prone to fall. In a bull market they believe prices are too high and will reverse sharply. In a bear market they believe we will go much lower.
Prophet Traders: Their only goal is to rightly predict market movement then let everyone know they did. They always think they know the top or the bottom, they love targets and believe that charts show exactly what is going to happen next. They do not really discuss their own trading they just predict prices.
Paper Traders: They love the market and study more than anyone but never quite make the plunge into real trading. They stay in the comfy cozy world of paper trading and make it more of a hobby. They just can’t make the transition into the real markets.
Rich Traders: Their only goal is to consistently make money and grow their capital over the long term. They do not ask for tips, or advice, they did their homework and they trade their method. They maintain confidence in themselves and their methods regardless of whether they are winning or losing.
I am of another type. Rag-Picker trader - Always looking for low risk low return trades. playing percentages. Very slow in making money.
ReplyDeleteInteresting. Rag-picker would mean stocks which have fallen down a lot? If yes, then this would not be a low risk trade.
DeleteBoss, No rich trader talks about his method or lets it become known. Only exception known is perhaps turtle method.
ReplyDeleteKey to become a rich trader lies in finding one successful method and sticking to it, isn't it?
Consistency/ discipline.
DeleteBest way to perform better in trading is to think like doing business.Both business and speculation involves risk but in case business risk involve is calculative but the same is not true in case of speculation.To be successful in business require proper planning, well define system of activities, manage your expenditure, always looking for opportunity with calculative risk and self confidence.Same is true for the trading, you need to plan your trade, develop the system of trading, consider your stop losses as normal business expenditure ( you can manage your expenditure but cannot avoid it),always look for opportunity having high probability with limited risk (patience and discipline is the key to success in trading, never involve in the trade where risk cannot be defined), at last you should have confidence in you and your system of trading.
ReplyDeleteExactly... but no one likes to think and plan (it is so difficult). People will ask 10 people before buying a touchscreen or a laptop etc and then buy. But when it comes to stocks, there is zero research. Just pure gambling.
DeleteThe main reason behind trading is perception. Most of people want to trade with the notion of earning easy money as is defined by their broker. But ground realty is exactly different. To develop a system lot of hard work and study required. Even some people develop their trading system but fail to execute because of lack of discipline/conviction. Other barrier to stick to our trading system is the human emotion, even when we have define our risk we are not able to follow it because human has the tendency not to accept losses.
ReplyDeleteHard work is the key... lots of it. Far more than any other occupation. Also, one has to encounter another formidable opponent which one rarely encounters elsewhere. And that is your emotions (greed, fear etc).
DeleteAs I read this, I feel I have transitioned from New Trader to Greedy Trader to Arrogant Trader to Scared Trader to Trend Trader as of now... Finally after months of jugglery in stock market, I realized that its not stocks that you need to deal with, but your own nature.. Impatience costs a lot more than one can imagine in Stock market... I have realized over the period that my 90% trend prediction were correct, but only 10% brought me profitable results..why? I was not believing in my self.. So may be a NON-BELIEVING TRADER can be also introduced in above list :))
ReplyDeleteThat's an interesting observation... defining oneself clearly itself is awareness of one's limitations and that now one is on the learning path.
DeleteHaving said that, man is truly one's own worst enemy. Here I am reminded of a scene from Termination (3 or 4) where the (dead) mother tells her son (recording) that Skynet will use the best part of you against you.
The stock market is something like that...no matter how successful you are in your professional life, the stock market will neutralise or negate everything. This is the only field where an amateur or an immature person has the same odds of winning as a professional.