Now here’s a surprise – every trader is also a human being and believe it or not no two human beings are the same. We all have our biases and our prejudices, we all have our likes and dislikes, we all react differently to both crisis and challenge. The world of the online trader is a very individual world – after all most of our time is spent tapping away at a lonely laptop where the most important and relevant control is self-control.
Now there are a large number of different ways to trade and it’s not that hard to see how personality types will make various sorts of choices. You can probably divide trading into three broad categories, namely short term, medium term and long term. We define short term as a period that lasts up to a few weeks, medium term from a few weeks to a few months and long term means holding on to securities for several months and possibly several years.
You could well imagine applying this to different personality types. The guy who is in for a quick kill goes for the short term, the one who can take a longer view the medium term and the real bona fide investor, possibly with a larger financial backing, will wait for the optimum moment before cashing in his stock of whatever it might be.
A great deal of very short term trading does in fact take place over just one day. And that of course is very attractive to the new boy who is in a startup situation. Impatience is the temperamental key to such people – what you might describe as the impetuousness of youth. The aim is to learn how to trade and garner in big bucks whereas the seasoned hand will know that the two conditions are in no way synonymous. The short term personality looks for short term solutions and rapid returns. Statistically such things can happen but experience teaches us that they rarely do.
We all recall that Polonius in Hamlet tells us that above all “to thine own self be true” and although its generally appreciated that he spoke in platitudes, in this case he hit the mark. Unless a new trader is fully aware of his own psychology and preferences and can relate that to the way he is trading, he is surely never going to succeed.
You may have what appears to be a very good strategy, maybe one that you have discussed with more experienced traders. But the crucial question that has to be asked is “will this strategy work for me”? Am I someone who panics and is full of self-doubt? Can I stay calm when everything seems to be going wrong? Do I have the energy and commitment to stay “at my post” for several hours in order to see a situation through? Understand yourself (be honest!), know your strengths and your weaknesses and devise a trading plan that follows from that. Good luck!!!