In the markets, there are many different types of traders and many motivations that drive them. The list below classifies different types of traders based on their psychology, their purposes and their motivations.
- Greedy Traders: They trade too big and risk too much because their only goal is the easy money. They usually end up blowing up their account. This is much common, especially with new traders.
- New Traders: They have no idea how the markets work so their only goal should be to acquire knowledge. New Traders do well to stay students until they have done their homework. Rushing in to make money without risk management, a winning strategy, the right mindset, and a trading plan will result eventually in failure 100% of the time.
- Arrogant Traders: Their only goal is to prove they are right and satisfy their fragile egos. Arrogant traders will lie, delete tweets and posts, never admit when they are wrong. When they are wrong they will hide it under a cloak, when they are right they will scream it from the rooftops.
- Trend Traders: Their only goal is to ride a trend and make money. Trend traders will buy high and sell much higher, they will short and cover much lower. They look like genius’ and prophets in a trending market either way it trends but they look like they can’t even trade in choppy or whipsawing markets. In the long term, they do very well.
- Scared Traders: Their only goal is to not lose their capital. Scared traders will immediately close losing trades and also immediately take profits. They are very stressed out in trading due to not understanding the nature of trading itself or just can not handle the uncertainty or risk. They either need to do their homework to develop their faith in or if they have done the homework trading may just not be for them. Scared traders never make money.
- Prophet Traders: Their only goal is to rightly predict market movement then let everyone know they did. They always think they know the top or the bottom, they love targets and believe that charts show exactly what is going to happen next. They do not really discuss their own trading they just predict prices.
- Paper Traders: They love the market and study more than anyone but never quite make the plunge into real trading. They stay in the comfy cosy world of paper (demo) trading and make it more of a hobby. They just can’t make the transition into the real markets.
- Rich Traders: Their only goal is to consistently make money and grow their capital over the long term. They do not ask for tips or advice, they did their homework and they trade their method. They maintain confidence in themselves and their methods regardless of whether they are winning or losing.
Which type of trader are you?