Perhaps the greatest luxury I have in this business is the ability to observe the experiences of many traders with different personalities, life schedules and risk capital, each trading in a variety of markets। What most astute brokers realize is that, over time, as some individuals prematurely exit winners while others desperately cling to losers, it becomes quite possible to match different “blood types” of those traders with their correct “trading diets.”
Clearly, we’re not talking the medical blood type here, but in the figurative sense it makes the right point. With practice, it’s not too hard to determine blood types (type of trading best suited to the individual) based on the personality of the trader, and then prescribe a diet based on that individual trader’s capital, experience, risk profile and schedule.
Discovering Your Blood Type and Trading Diet
Just like a diet, where there is no right plan for everyone, in trading there is no single plan for all traders. Before deciding whether to “cut out the carbs,” “add more fiber,” or simply avoid certain markets, do some self-assessment, starting with personality. For example, are you hesitant or impulsive? Patient or short-tempered? Identify strengths and weaknesses, and then let someone close to you help pinpoint those personality pros and cons. Have a tough skin; it’s for your own good.
To further understand your personality, keep a trading journal to help zone in on specific traits and how they affect your trading. Remember, understanding your personality is one thing; understanding it when you’re trading is another. While patience with children is good, patience with a losing trade is not. A journal enables traders to review winning and losing trades and identify factors that aided in success or contributed to failure. After reviewing inner traits, don’t forget to review the outer ones–your schedule and risk capital. Think long and hard about how much you have available in terms of time and risk capital when it comes to trading, and don’t delude yourself. In addition, look at how you are using your time and risk capital. Go over the market(s) you are trading, the style of trading and time frames you are using. Is this market, this style and this time frame suitable to your risk capital and personal schedule? Are they suitable to your personality?
Doing some self-assessment is absolutely essential to determining what type of trading diet you should be on, as the examples later will make clear. But first let’s define the Avatrade Trustpilot reviews trading blood types and their respective diets.
Blood Types and Trading Diets
No A-positive or universal donor types are necessary here. Instead, for our purposes, let’s classify types by using NT, PT, DT and ST.
NT. Is trading suitable for you at all? That is the question. Trading require a desire to take risks and, of course, the ability to afford to take them. These simple suitability questions must be firmly answered in the affirmative before anyone can consider taking the plunge. Those who have little desire for risk, have little risk capital to spare (and completely disposable income at that) and little time to devote to this very challenging exploit are classified as blood type NT (No Trading). The right diet is no trading at all. No carbs, no cals, no fiber, no fat. Nada.
PT. Those who are either gun-shy or trigger happy would be classified as blood type PT (Position Trading). With what kind of regime, you ask? Clearly this type requires a rule-based diet. To develop those rules first and foremost means doing some homework after market hours. Once these rules are in place, test any possible trade idea against those guidelines because each trade must pass this test before Mr. or Ms. PT enters the trade. This is the time to plan a trade from start to finish, visualizing a few different scenarios with a possible action plan. It may also be the time to employ the assistance of a full-service broker. His or her job should be to help implement the rules that will keep the trigger-happy trader from going nuts or help the trader with a fear of pulling the trigger to take the right kinds of actions.