The author is an expert in the field of multi-asset trading.
9 Types of Traders – Which One are You?
Every trader has his or her own personality and trading style, each with its own strengths and weaknesses. Your general personality type may also characterise your forex trading style, but it doesn’t mean that you’re limited or defined by it. To succeed in trading in different financial markets, you should understand how personality and psychology can have an impact on trading, and know which type of trader you are yourself. Below we’re listing some of the main trader personality types and their strengths and weaknesses, so you can identify which traits are preferential to you.
Note that these are generalisations and not an endorsement of one trading style over another.
The Cautious Trader
The cautious trader is always safety first, which isn’t a bad thing, but can be limiting. He is a conservative trader who makes few transactions. The cautious trader acts only after much thought has been put into every decision, but can miss opportunities because of his hesitancy. His principle is to “prevent all possible losses,” and is committed to managing his capital.
The Adventurous Trader
The adventurous trader is eager to enter many new trades with larger contract sizes. He is less conservative in managing his capital, which exposes him to increased risk of loss. The adventurous trader has great confidence in himself and in trading and obtains a lot of positive and negative experiences from the large number of transactions. His thrill-seeking nature can lead him to entering trades without enough consideration.
The Copy Trader
The copy trader is not self-reliant in his trades, but is rather a very good observer of others. He listens to analysts and follows their recommendations, which makes him have a good overall view of the market due to the many opinions and points of view he consumes. The large number of different analyst opinions can, however, be distracting, and the copy trader doesn’t take the time to learn himself.
The Flexible Trader
The flexible trader trades according to the market direction and is not set in his ways. He is very flexible with market volatility and adjusts to market conditions. The flexible trader assesses his current position in the market and changes his point of view accordingly. He deals cautiously with the market, but being flexible also required a high degree of effort to always be on top of movements and fluctuations.
The Gamble Trader
The gamble trader invests in large contracts and exposes himself to high risk. His goal is quick money and extraordinary profit with no risk aversion. The gamble trader doesn’t invest time and effort into learning and using proper analyzing methods. This type of trader is always greedy for more and usually loses too much, making his journey in the market a short and disappointing one.
The Arrogant Trader
Much like the gamble trader, the arrogant trader is too focused on the wrong things to be successful. He sees himself as right all the time and is not flexible with the market. This usually leads to a lot of losses and a short trading career. The arrogant trader doesn’t learn from his mistakes and is very stubborn. There are no advantages to this trader type, only eventual disappointment.
The Educated Trader
The educated trader is a trader who has dedicated time to learn and improve his skills. He learns and uses various analyzing methods, and learns from the experiences of others. The educated trader has a clear trading plan and a polished strategy. It takes a lot of time and effort to be an educated trader, and the amount of information to digest can be overwhelming and distracting if not managed correctly.
The Snowball Trader
The snowball trader makes few hasty transactions but rather long ones targeting relatively long levels. He focuses on these long deals without caring about short-term gains. The snowball trader is not hasty to profit but is rather focused on the larger long-term picture. Not being active in the market and only being in a limited number of transactions can put him at risk of total loss if he doesn’t diversify.
The Mixed Trader
The mixed trader combines the advantages of both fundamental and technical analysis to determine the best transactions. He links economic and political data and events affecting market movement with technical indicators that help to identify good points for buying and selling. By combining different analysis methods, the mixed trader ensures that he sees the whole picture.
As you can see, there is no one right way to trade. By taking the positive traits of each traders' personality and applying it to your own trading, you can better manage your risks and be more productive. By knowing yourself better, you can better learn to be the best version of yourself.
Wish to avoid the mistakes outlined above and learn to adopt the positive skills and habits? Head on over to the Equiti Academy and start learning!
Margined Forex and CFD trading are leveraged products and can result in losses that exceed deposits. The value of your contract can fall as well as rise, which could result in receiving back less than you originally deposited. Please ensure you understand the risks and be sure to manage your risk exposure effectively. Equiti does not provide any investment advice.