Analysis of 4 Essential Traits of Traders/Investors
The essential traits of traders/investors can be captured in the profit/loss matrix diagrammed as below. Basically, we belong to one of the traits.
The two factors that define traits of traders are profit and loss.
Quadrant 1 trait tends to take the small profit and run because of fear of losing. Without the assistance of a principle-based system and trader’s confidence with the system, taking a small profit and then run is the most natural and common mistake which is hard to avoid. For the losing trades on the other hand the Quadrant I character tends to linger with the position hoping the market will soon turn around to his favor. They do not know if the market had changed direction or not, so they began to pray. Many times, the market kept going against him and he needed to know how far is too far before getting into serious problem. When traders or investors are holding a position, market impulses could drive them to become less objective. Some of them even cannot pull the trigger to take the stops till getting the margin calls if they trade futures. A trader told me that his biggest problems were getting out too quick on the winning trades and staying way too long in the losing trades. This is a common problem that quadrant 1 traders face.
Quadrant 2 is Buy and Hold. Investors holding long term positions through the Dot.Com Bubble understand that markets could wash away a large portion of the profit in a very short period and took a long time to recover if they ever could.
Quadrant 3 is the scalper who does day trading without following the principle-based trading system. Taking small profits and small losses could end up with a net loss after paying commissions.
Quadrant 4 is the principle-based trader. He follows the market with his time-proven trading system. The market can be chaotic and unpredictable, but his way of trading is simply following the market with calculated risks.
He spends time studying and practicing his principle-based system well and builds a strong confidence with the system he uses; for every position he takes he knows exactly where the true market support and resistance levels are and taking well calculated risk for each position he takes so that he is able to take full advantage of the market rally and stay aside when the market is trending down. Perhaps he shorts the market if he trades the futures. He uses his universal trading system to find wherever money is and simply follow the market.
Obviously, our objective is to be the ‘principle-based trader, nailing the market moves and making a lot of money but so many of traders can be exhibited characteristics from Quadrant 1, 2 and 3. Only by identifying one’s own tendencies can he or she begin to find the cures.
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The reduced price for a 30-day trials online is $99.
With this code: CHBXW3 within the next 7 days, the special offer for the 30-day trials is $57.
To your prosperity,
The AbleSys Team
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