There are many approaches to achieving success as a trader. Find one that fits your personality.
Developing a trading style consistent with your personality may be an important factor in trading success. After all, there are a variety of trading approaches and many ways to potentially make money in the financial markets. Because there is no one "holy grail," different approaches may work better for different people.
If you've ever taken one of those online personality quizzes that tells you your power animal, sci-fi movie character, or who would play you in the movie of your life based on your answers to a few questions, you can potentially apply those same questions to determine your trading personality.
Sometimes the best clues about the trading approach suited to you may be no farther away than your closest mirror. But if you've got a hankering to seek within in the hopes of improving your trading results, there are many personality tests out there that might offer insights.
If you’re interested in a full test, there are plenty of options online. But here’s a quick, five-question quiz to get you started.
If you answered yes to question one: You might want to consider automated or systematic trading approaches. You can purchase off-the-shelf systems or create your own algorithms if you like. With the number of “big data” sets available, back-testing and tweaking has never been more accessible.
If you answered yes to question two: Consider studying charts and learning about technical analysis. Visual, creative, and intuitive people sometimes gravitate toward a trading approach that involves reading the charts and using visual stimuli to help make trading decisions.
If you answered yes to question three: Consider your trading time frame. Short-term, intraday trading could be a good fit for you. But it may not be wise to shoot first and ask questions later. It is prudent to ask the questions ahead of time.
If you answered yes to question four: You may well be a weekend warrior. You can check the markets at night and study and prepare trades on the weekend. Consider a longer-term, trend-following approach. You can use your spare time to study market action, identify potential longer-term trend opportunities, and even plot out entry points, target levels, and stop-loss levels ahead of time.
If you answered yes to question five: Consider using fundamental analysis to determine which candidates might fit your portfolio, and to help you select your entry and exit points.
It may just take some time and exploration to find the approach that matches your own personal comfort zone. Remember, all investments involve risk, including potential loss of principal. Be sure to consider all relevant risk factors and your own personal financial situation before trading.