What Type of Trader Are You?
It’s important in this industry to assess your trading type or style. This is so you can figure out what works best for you, as an individual. You may be asking yourself – What do I mean by “type” and “style”?
A trader’s type relates to their time horizon, goals, commitment level, and availability to trade.
A trader’s style relates to their trading strategy and approach to making money.
There are three main types of traders:
- The Scalper – This is a “fast” trader. They are taking several different trades throughout the day and are in and out of trades very quickly. They focus on making more trades with smaller profit margins and are often available to sit in front of the screen all day to accomplish this.
- Day Trader – These traders focus on trends in bull & bear markets and trade on higher time frames than the “scalper” type. They are still trading throughout the day, but are less active in their number of trades and are focused on higher profit margins.
- Swing & Position – These traders don’t have the ability to sit in front a screen all day, either because of scheduling conflicts or a full-time job. They still want to trade, but with better tools & resources that allow them the flexibility to maintain their day to day schedule.
Our core strategy is universal and can be traded by all 3 trader types. This is done by simply changing the timeframes they trade on.
A trader’s style refers to the strategy the employ in working with live markets. There are many different styles, although the five most common are:
- Trend – Trading with the market’s directional bias.
- Reversal – Trading when markets reverse direction.
- Counter-Trend – Trading against the market’s trend direction.
- Breakout – Taking a trade position within a trend’s early stages.
- Momentum – Trading with strong upward or downward trends.
Our core strategy at NeuroStreet focuses on a combination of 3 styles: Trend, Momentum, and Reversal. This allows our strategy to remain effective in changing and dynamic markets. Every day the market will present different scenarios, and, by utilizing a combination of styles, you will be better prepared to react to these scenarios and remain consistent in changing conditions. Our overall “style” is directional at NeuroStreet we trade with the trends and momentums in the market. Even our reversals styles are still utilizing the direction of the flow of capital and accounting for the trend & momentum of the daily markets.
This may be a lot to take in or maybe you’re used to a different style or strategy. The NeuroStreet style will be outlined and featured in greater detail in future blog articles, so you can see if this will be right for you.
Learning an effective trading strategy can seem like a huge hurdle, but it doesn’t have to be. As you approach trading, it’s crucial to not skip steps in the learning process. Make sure you understand all of it’s components before you trade live markets. Using software can also help to enhance decision making. Treat trading like a business, not a hobby. Also, make sure you are mentally prepared for trading. Doing practice exercises, marking up your charts, doing bar-by-bar analysis in simulation and market replay will drastically improve your chance of success. If you treat this seriously and want a positive outcome it is important to follow this process while being patient to learn and develop your skill. Those who do the work will be rewarded by their skill and application.
This is an important step that people often skip. I’m sure you’ve heard it before, that a successful trader is “lucky” somehow. Trading is not about luck it’s about preparing and knowing when to capitalize on opportunity. Those who practice their skill and trading education reap the rewards. It is important to know what level you are in the trading learning process. We like to break it down between these 4 different stages, to give you a better idea of levels of growth.
In order to get to the “Unconscious Competence” level, we need to treat trading like a business not a hobby! Start first with simulated trading before going to live trading. We can plan for success by only taking the best setups and practicing patience before action. Evaluate risk when planning your trade setups. What works for you might be different than what works for someone else. The most important part of this equation is Practice, Practice, Practice!
In this situation, when I use the word “turnkey”, I mean a solution that is easily implemented into your regular activities. Knowing the ease of the installation process and how long it takes to get up and running is important. What kind of support does the company have? Ask around and see if anyone in your trade community knows of the track record of the company. All good companies should also give their clients access to a live trade room where you can learn real time strategy. Many of them charge extra for this privilege, which is a good thing to find out up front before you purchase any software.
The strength of a company’s reputation is best seen through the confidence of their customers. If a company has mostly satisfied and successful customers, why wouldn’t they let you talk to them? Contact the owner of the company and ask how you can connect with their clients. Be ready with a list of questions once you’ve got their contact info to make sure you get the most out of your meeting.
This one is very subjective. Different companies have different approaches; some may click for you but not for other individuals. Review their website, talk with their support or the company owner, and watch some of their videos. Their content will give you a feel for their business model and trading approach. Join their email list and see if they offer live webinars. Learn as much as you can so you can make an informed decision. With the right partner, you’ll be well on your way to your own trading success.
Is your overall price going up or down? Identifying patterns of when a price “rallies” or rises and when a price is dropping will also help determine which zone and pattern you’re seeing in action. There are commonly 4 patterns you’ll see: