What Type of Trader Are You?
Market Meditations | April 22, 2021
Trading is not a one size fits all category. We all have different schedules, temperaments and preferences. Many people could be better trades if they found the type of trading that suited them best. Today, we provide you with a quiz to determine your trader type. Begin by answering these questions and noting the letter of your answer. At the end of the quiz, you will find out:
- What your trader type is
- How you can best trade given your trader type
Take a note of the letters you pick for each of the 5 questions.
1.You see a chart that is looking bullish. What type of opportunity excites you most?
A. I’ll buy and sell in the next few minutes. Locking in a profit immediately. Perhaps I’ll repeat this process throughout the day.
B. I’ll buy first thing and sell at the end of the day. I don’t have to be watching the chart all day or try to guess the best exit level. Plus I don’t have to worry about leaving the position overnight.
C. I’ll find the best level to buy and sell at over the next few days or weeks. I’ll just dedicate a few hours each night to watching the charts and then let the magic work.
D. I’m happy to wait for a good level to buy and leave this position for months. I’m confident about the bullish trend and I don’t need to be worrying or checking the charts each day.
2.How much time do you have each day to watch the charts?
A. I’m basically on my laptop 24/7 so if there’s anything happening in the markets, I’m all over it.
B. I can’t be at the screen all the time but I can check it most times throughout the day.
C. I work a day job but I’m passionate about trading. I can spare a couple hours each night.
D. I want to trade but I just don’t have the time to watch the charts. I need to be able to plan a trade but then leave it be for some time.
3.Your trade is losing you money. How do you feel?
A. It’s not a nice feeling but it doesn’t bother me. The frequency of my trades usually means I get a mix of profit and loss making trades.
B. It’s disappointing. I’ll have to do better tomorrow.
C. I place fewer trades so to lose money on my trade is upsetting.
D. I’m tolerant of losses. I’m holding positions for the long run so it’s part of the package.
4.The markets are range bound today. What’s your response?
A. This is so boring. I’m motivated by fast moving markets.
B. This is disappointing. I started the trading day with a clear bias so I didn’t expect to be range bound.
C. I’m not that bothered. As long as it doesn’t last too many days or weeks.
D. To be honest, I can go days without watching the charts. It’s a marathon not a race.
5.How quickly do you accept defeat?
A. Very quickly. If the trade doesn’t play out like I thought, on to the next.
B. By the end of the day, I’ll usually close my position.
C. I stick to the plan for a couple weeks. I thought it through carefully.
D. I can go months without accepting defeat. I believe in the long term win.
Each letter counts for a different number. A=0, B=1, C=2 and D=3. Calculate your total score and see what type of trader you are.
4-7. Day Trader.
8-11. Swing Trader.
12-15. Position Trader.
Different Trader Types Explained
There is no trading type that is better or worse than others and some people may have multiple trading styles. Position trading bitcoin and scalping altcoins, for instance. What’s essential is to understand what style or styles suit you best. Only then can you truly leverage your strengths. A pure scalper may prefer not to take longer term positions, for example.
Scalper. A scalper is a trader who looks for short, minimally profitable opportunities in the market that can add up over time. If you’re a scalper, you likely don’t have the patience to hold a position for a long period of time and you’ll probably grow bored easily when keeping trades active for too long. Scalpers are motivated by the excitement of fast moving markets. They aren’t happy about placing losing trades but are typically less impacted financially and emotionally due to the small nature and frequency of the trades they do place.
Day Trader. Day traders usually pick a side at the beginning of the day, acting on their bais, and then finishing the day with either a profit or a loss. Similar to scalpers except perhaps without as much free time. If you have a busy life but still want to place shorter term trades you may prefer this method. These kinds of traders do not hold their trades overnight. For day traders, there are exciting opportunities in altcoins right now, check out this guide for more information.
Swing Trader. Someone who enjoys staying in a trade for as little as a few hours to potentially weeks. If you’re a swing trader, you like the analysis aspect of trading – finding patterns that develop and exploiting them like a cunning strategist. Because you place fewer trades on a daily and weekly basis, losing trades could have more of an impact on your psyche, so keeping your longer term goals in mind and sticking to the plan are imperative.
Position Trader. A position trader has a much longer time frame in mind. If you’re a position trader, you could be in a trade for months or even years if your conviction is strong enough. Usually based on a fundamental perspective of political, sentimental, or supply/demand reasoning, you brush off the fear of short term movements. You’re much more tolerant of drawdowns and could take losses for a very long time. If you are fortunate enough to have the temperament for this trading style, you may want to consider Dollar Cost Averaging into projects you find interesting.