(Watch the Video Online: Market coach Doug Hirschhorn, PhD, discusses different trader personality types and how you can take advantage of them.)
Is there an ideal trader personality? In my opinion, no.
Actually, it’s more important to develop your own style based on your own personality. For example, if you’re analytically minded, you should have a trading style that focuses more on data, technicals or fundamentals, and less on price action.
If you’re an “intuitive” person, you should establish a style that has shorter holding times and a go with your gut type of approach.
If you are an introvert, you should avoid chat rooms and instead, set up your own game plans and stick to them.
And if you are an extrovert, you should increase your social interaction and look to pick out the “best ideas” you uncover from others.
So once you determine your personality type, how do you figure out how to put the right size on for the right trade?
Many traders fail to do this is because they’re distracted by the dollars involved in the trade. Get rid of this performance barrier by taking time to identify what you consider to be you’re A, B and C trades.
“A” trades are the ones that have highest conviction, while “C” trades have lowest conviction in, but are still worth doing.
Then write down what size trade you should do if it is an “A” idea, “B” idea or “C” idea. This is determined by how much capital you have to risk and what you’ve established as your daily loss limit.
Then all you have to do is match them up, meaning if you have an “A” trade then do “A” size. If you have a “B” trade, do “B” size, etc.
Traders generally get themselve into trouble when they have “A” conviction but only put on “C” size, or have “C” conviction and put on “A” size.
