Comparison of 5 Trading profiles
Trading profiles form an important part of a trader’s strategy and help shape one’s own decisions. They are vital to the development of a trader’s career, therefore knowing them can be a great advantage.
Social Trading Platforms such as Tradeo present the benefit of allowing traders to follow their peers’ orders. Tradeo provides a unique system in which every user has a social profile so that anyone can analyze whom to follow or copy. This allows beginners to know which market leader is more aggressive or moderate in his investment dealings and make a more conscious decision on who to copy and who to follow. This, in turn makes the investing game a lot more transparent.
As no investment in the Financial Markets is composed solely of profits, a trader can go through different periods in his career. Therefore, a person’s trading profiles can change a lot over time, depending on a variety of factors.
As is often the case, traders end up developing a specific profile of investing when trading over the course of time. Knowing these profiles is helpful to determine how risk a copying trader is willing to accept and what his own strategy will be. It will also help in the decision-making process by giving him some inner peace as he now has a plan to follow and results to expect.
Can you identify which one fits you best?
Here we summarize the 5 main trading profiles you’ll encounter online.
Basing his decisions on charts, graphs, and all calculations that come along with them, the technical trader is often more experienced. This type of trader is still influenced by Fundamental types of analyses (see next entry) and looks for signals of convergence and divergence on the charts and graphs to base his decisions on. This trading style demands more knowledge and expertise.
As the most common of the trading profiles, these Traders make fundamental analyses about companies based on their financial reports, mergers and acquisitions, and stock splits. Because of its ease of implementation, the fundamental type of trading is most suited for beginners.
One of the riskiest of the trading profiles. Scalpers are traders that try to earn in small profits in their positions. These traders sometimes make hundreds of operations each day in order to try to win on the bid-ask spread (meaning, how much people are willing to pay for an asset minus how much sellers are willing to sell it at a given moment). As this type of trading is much more difficult due to order costs and the necessity to have a quick hand on the trigger, it definitely isn’t recommended for beginners.
Often keeping their positions for more than a day, Swing Traders also show many Fundamental traits. They are usually positioned between day trading and trend trading, and will try to make a profit on the short or medium term.
Traders of this style are characterized by their patience, as they wait for the perfect opportunity to invest. Momentum Traders remain on the lookout for products whose value is about to move greatly (either up or down) in order to make a profit on them. This style is also very much advised for novices as it usually involves less risk.
In the spirit of promoting better trading, Tradeo advises its traders to be cautious of what trading profiles they fit in. Of course, with time, traders can display many different traits and, in truth, all analyses contribute to improve trades. Therefore, it’s vital to study which type of trading they identify themselves more with and focus their mental effort on that. These types of trading are not written in stone and changing profiles midway is possible (and even advisable). However. more often than not, traders specialize themselves in one style only in order to master it.