What kind of stock trader are you? There are a variety of personalities at work in the market, many of them self destructive. Ideally, you want to have aspects of each as a sort of personality disorder, but most of us are just one or another.
After suffering a loss, they are eager to right what has been made wrong. On their next stock trade, they sell the moment their profit exactly offsets the previous loss. Now they are even, and don’t have to go through the emotional despair of losing in the market. Unfortunately, that stock they sold to make back the previous loss keeps going higher. Emotion is Even Steven’s master, happily riding a fence of risk aversion is his destiny.
A perfect score on the LSAT for logical reasoning, and often seen wearing a small steel ring on their writing hand, the Scientist is a victim of their own intelligence. They can provide the mathematical derivation of any techincal indicator of fundamental ratio, and often show charts that appear like a basket weaving class gone terribly wrong. Lost in the details, they may not make a whole lot of money in the market, but they can always offer a well thought argument for why.
Like a bull in a china shop, these maverick traders often end their trading career broke but full of exciting tales of the one that got away. Capable of turning a simple stock tip in to a rollercoaster ride of amazing profits and admiration but ultimately culminating in two mortgages on the family spread.
In a Bull market, they are the all knowing experts on financial markets. In an uptrend, they do quite well because they buy hot stocks and hang on to them believing in the legitimacy of the company’s sexed up story. Alas, all profits are but short term loans, because when the market turns their expertise is exposed as a fallacy and they give back all that they gained. Voted most likely to return a BMW to the dealer before the lease expires.
Often seen smoking pipes and listening to Vivaldi, the Professor is a student of financial theory and knows that in the long run, the stock market can not be beat. Rather than disprove theory, they instead indoctrinate anyone who will listen, including naive business school students, with their theories of market efficiency. They drive sensible cars, wear ensible shoes and don’t make any money in stocks.
The Value Investor
Value investors have refined the art of buying good companies that nobody likes. Unfortunately, stocks don’t go up until other investors like it, so most value investors are experts at practicing patience. They typically sleep well because they own quality, but are also forced to grow grey waiting for their investments to pay off.
There are a multitude of garbage stocks out there that go up. The Doubter looks for pigs adorned with lipstick and short sells them. This variety of investor loves to uncover speculative stock scams that, like a house of cards, eventually must fall because they lack a solid foundation. The Doubter’s greatest weakness, however, is bad timing. Bad stocks can go up a lot before the bubble bursts, and it can be difficult to carry a short through the price appreciation. Doubter’s need deep pockets.
Did you relate to one or more of the above personalities?