There are different ways in which we can classify traders:
By the timeframe they use to trade: there are long term traders who use the weekly or daily charts to open their trades, swing traders who use the 1H and 4H (some even use the daily chart) to look for trade opportunities, there are also day traders who use from the 5M to the 1H charts, and very short term traders or scalpers, who use the 1M and 5M (some even use tick data).
By the way they trade: Some traders like to trade based on fundamentals, other based on technical indicators, some others use forecasting tools such as Fibonacci or Elliot waves, others base their trades on price action, chart patterns, planetary cycles, some even use their pets :) to determine which currency pairs to trade.
But the one I like to use its much simpler: Disciplined and undisciplined traders.
Which one are you? Here are a few characteristics of each type of trader:
- They don’t have a system, if they have one, they don’t follow it
- They don’t understand that each trader is different
- They take trades following advices from other traders, internet, forums, etc (when not using the same methodology)
- They don’t use money, risk or trade management
- They are looking for quick gains here and there…
- Because they don’t have a system, the trade based on their emotions
- They think trading is easy, and will become millionaires after a few months
- They do have and follow a system, every single rule, they understand it’s the only way to achieve consistent results.
- They know that it is important to trade a system that fits their trading style, this way they’ll be able to follow it
- They never take someone else’s, they only take trades when their system gives them a signal
- They understand that using money, risk and trade management it’s even more important than the signal itself. It’s what will keep them alive when things go wrong, and increase their profitability then the market behaves well
- They no longer look for quick gains, again, they just follow their system
- They understand that emotions play an important role on their trading, they try to use them on their favor
- They know trading successfully come with experience, and they rather have steady results than trying to hit home runs
So which one are you?
Really, try to think about this, read each one of the points discussed above and see what type of trader you are.
To be a discipline trader is no guarantee of achieving consistent results, but let me tell you something, in order to become a successful trader, you first need to become a discipline trader, it’s like: to go from point A to point C, you need to get through point B, there is just no other way.
How much time would it take a discipline trader to become a consistent trader?
There is no right answer here… but I assure you, not much time…
Is it possible for an undisciplined trader to become a consistent trader?
What can I get from this article?
It’s not important the type of trader you were yesterday, or last week or on the last X years. The past has passed, and the past does not dictate the future. So I want you to think now, Today, what type of trader do I want to be? You know the characteristics of them, you know which one is more likely to succeed. So again, what type of trader do you want to be from now on?
Feel free to comment, even if you don’t agree with me – the discussion might get interesting :). And don’t forget to tweet it, “like it” or +1 it to share it!
Tags: types of traders