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in the present, where we are in our lives financially, how we imagine our future to be, and our short- and long-term investment goals. |
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We need not delve into the past here to analyze the foundation of personality traits. For our purposes, we shall simply identify the trading styles shaped by it. |
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Remember that favoring one trading style over another doesn't preclude changing our style. For some, it just may be more difficult, because it means fighting our natural ways of thinking and behaving. But it is never impossible, just as changing habits in other areas of our lives is never impossible. |
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We will see that each of these styles seems to fit best with a particular type of tradingwhether it be active trading, short-term position trading, or occasional trading with an intermediate- or long-term orientation. |
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If we wanted to create the "perfect" balanced trader, however, it may be that a combination of behaviors from differing styles is most desirable for a particular kind of trading. I believe this is actually the case, especially for those interested in active trading. But, as we said, because those with one style of trading tend not to easily acquire traits from another style, it is tough for anyone to have the all-inclusive, balanced traits that may prove to be ideal. |
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For example, those who are cautious, conservative, and tend to be disciplined investors have trouble developing the required chunk of the gambling-impulsive style, which would make them better able to take risks and more comfortably execute short-term trades. Or gambling types may have trouble learning the necessary discipline to make reasonable, well-thought-out, intermediate-term trades. |
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To repeat, the important point here is this: When there is a mismatch (for example, long-term investor types want to start active trading), they need to realize they will have a tougher time than if they have the personality traits that are suited for day trading. They will have to fight against what is their basic inclination. |
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People whose trading style is opposite the traits required for a different approach usually aren't interested in that style. For example, those who hate being focused on a computer screen watching quotes go by for long periods of time simply won't entertain the idea of being frequent traders. If they do trade a lot, they refuse to watch quotes and just put in limit orders to buy and sell at set prices. They realize they can't tolerate the "boredom" of watching numbers for any length of time. |
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