When I talk to new traders I find they all have some things in common. Most new traders are excited about all the opportunities the markets hold and are eager to jump right in; with a plan of attack they feel certain will be successful. What I have found is the old boxers'addage "Everyone has a plan until they take the 1st punch" holds true almost every time. Typically, most traders are a strong willed bunch who doesn't give up. So they continue to try to work their plan until the money is gone. However some new traders rely on their broker's personality to guide them through the markets. Through my experience trading for clients I have learned that successful traders identify their personality type and trade within their temperament.
Here are the 3 trade personality types.
1) Day Trader- Traders who like to attack the volatility of the markets everyday. Day traders are satisfied with quick profits. They are comfortable with small profits and constant activity.
2) Position traders- Position traders like to execute trades with a 2-3 day window in mind. Position traders will commonly have objectives marked and anticipate execution with that in mind. They are also willing to let the near term market trend work for them. Also, as position traders encounter objectives either for or against they will exit the market and wait for another indication to reenter on strength. Unlike most day traders position traders usually use smart money management and tend not to over extend.
3) Buy and Hold Trader- Buy and hold traders, or Sell and hold traders are the most conservative of the 3 types. Buy and hold trader shave defined objectives for entry and exit inside the market. Most buy and Hold traders watch the markets patiently for opportunities, and rather pass on opportunities that may not meet all of the objectives. These traders are almost always good money managers, keeping in mind how much money is required to enter and hold positions through the volatility of the markets. These traders don't trade nearly as often and understand that margin calls could be frequent as they swim through the volatility.
NOTE: Most brokers want you to be a day trader. That is because they must generate commissions. There are brokers however that will help you identify your personality and help you trade within it.
As you develop as trader remember identifying your trade personality is one of the key fundamentals you will need to understand.
HAPPY TRADING