How to Determine the Kind of Trader You Are

euro-870757_1280Not all traders are the same, and in fact – no two traders are exactly alike. It is tempting to just try to emulate the top dogs and their style of investing and trading, but at the same time you need to make sure that it matches your own style, appetite for risk, and capital – otherwise things could go horribly wrong.

While you could experiment, try out different styles of trading, and perhaps eventually stumble across one that suits you – it would be best to approach it methodically so that you’re able to narrow down the field somewhat.

“Are You a Risk Taker?”

All trades carry some inherent risk, but the question is: How much risk are you comfortable with? Some traders are comfortable staking a significant portion of their capital on a high risk trade while others may balk at the very idea. Also some types of traders require a willingness to take risks and absorb losses if necessary in order to ultimately profit from the approach.

If you’re worried about your tolerance for risk then it may be best to err on the side of caution. It will take time before you’re able to really determine the level of risk you’re willing to expose yourself to, and it is important not to rush it.

Short Term vs. Long Term

Both short term and long term trades have their ups and downs. For short term trades the core idea is to make numerous trades over a short span of time for minimal profit that will ultimately add up. On the other hand long term trades often look to exploit a bigger shift in the position of the market, and make a big profit off a single trade over a longer period of time.

As you can guess, the preference for short term or long term trades boils down to a question of patience. If you enjoy predicting the movement of markets and have the patience to stick things out despite short term movements, then long term trading may be right for you. On the other hand if you’re after immediate gratification then short term trading could be best.

It is important to note that the type of market that you’re trading in will also influence the style of trading. Assuming you would like to dabble across several markets then opting for a varied platform such as ETX Capital that covers forex, binary options, equities, commodities and other markets may be best.

All said and done, taking the time to figure out what style of trading suits you best will pay off in the long term. Once you know the style that you’re comfortable with you’ll be able to play to your strengths and are much more likely to achieve the profits that you’re after in the process. In short – it is probably one of the first things that you should do when you decide to seriously start trading on any market.

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