I have a question for you.
What kind of trader are you?
No, I’m not asking whether you’re a bull or a bear. I’m not asking whether you trade stocks, options, futures, or crypto. And I’m definitely not asking whether you prefer candlesticks or bar charts.
I’m asking a much more important question:
What kind of trader actually fits your life?
Because I’ve watched a lot of traders make the same mistake.
They find a strategy they like.
They see someone making money with it.
They watch a YouTube video.
They read a book.
They attend a webinar.
They get excited.
And then they decide:
“That’s what I’m going to do!”
There’s just one problem.
The strategy was designed for somebody else’s life.
And now they’re trying to squeeze themselves into it.
That’s backwards.
Your Trading Strategy Should Fit Your Life
Think about buying a pair of shoes.
You can find the most expensive, technologically advanced, ridiculously impressive running shoe on the planet.
But if it doesn’t fit your foot, it’s a terrible shoe for you.
Trading works the same way.
The “best” trading strategy in the world isn’t necessarily the best strategy for you.
Maybe you’re a full-time trader with eight hours a day available to watch the market.
Maybe you’re a business owner who can look at the market for 30 minutes in the morning and 30 minutes at night.
Maybe you have a full-time job.
Maybe you’re raising kids.
Maybe you travel.
Maybe you love being active in the market.
Maybe the thought of watching a one-minute chart makes you want to poke yourself in the eye with a pencil.
These things matter.
Your trading strategy needs to fit the trader.
Not the other way around.
So What Kind of Trader Are You?
Let’s start with the big categories.
Day Trader
You open and close positions within the same trading day.
You need time.
You need focus.
You need a well-defined process.
And you need to be comfortable making decisions quickly.
If you have a full-time job and can’t look at the market for six hours a day, day trading might not be the best fit.
That doesn’t mean day trading is bad.
It means it might not be your game.
Swing Trader
Swing traders typically hold positions for several days to several weeks.
This gives you more flexibility.
You don’t necessarily need to be glued to your screen all day.
You can identify a setup, plan the trade, enter the position, and manage it according to your rules.
For a lot of people, this is a much better fit with a normal life.
Position Trader
Position traders think even bigger.
They may hold positions for weeks, months, or longer.
The decisions are generally less frequent, but that doesn’t mean they’re easier.
In fact, holding a position through market noise requires a different kind of discipline.
You have to be comfortable watching your position move against you without immediately assuming you’ve made a mistake.
Investor
And then there’s the investor.
The investor may have a much longer time horizon.
Instead of asking:
“Where is this stock going next week?”
the investor may be asking:
“Where will this company be five or ten years from now?”
Different question.
Different time horizon.
Different process.
Different expectations.
What About Options?
Here’s where things get interesting.
Options don’t necessarily define your trading style.
They are tools.
You can use options for:
- Directional trading
- Income
- Hedging
- Speculation
- Portfolio protection
- Leverage
- Defined-risk strategies
- Cash flow
A covered call trader and a short-term options trader may both say:
“I trade options.”
But they’re playing completely different games.
It’s like saying:
“I use a hammer.”
Okay.
What are you building?
That’s the question.
Here’s Where I Think Traders Get Into Trouble
They start with the strategy.
They don’t start with themselves.
They say:
“I want to learn the Iron Condor.”
Great.
Why?
“Because someone on YouTube said it makes money.”
That’s not a trading plan.
That’s a shopping trip.
Before you choose the strategy, you need to understand the trader.
Ask yourself:
How much time do I have?
If you have 30 minutes a day, don’t build a strategy that requires you to monitor positions every five minutes.
How much capital do I have?
A $10,000 account and a $1 million account don’t have the same problems.
Don’t pretend they do.
How much risk can I tolerate?
And I’m not talking about how much risk you think you can tolerate.
I’m talking about what happens when you lose.
Anybody can say:
“I’m comfortable with risk.”
It’s easy to say that when the market is going up.
Let’s talk again after you’ve taken five losses in a row.
That’s when you find out what your risk tolerance really is.
Do you need income?
If you’re trying to generate cash flow from your portfolio, that changes the conversation.
You may be more interested in dividends, covered calls, cash-secured puts, or other income-producing strategies.
Do you enjoy being active?
Some people love trading.
They love research.
They love charts.
They love finding setups.
They love making decisions.
Other people don’t.
And that’s okay.
You don’t have to sit in front of six monitors with a giant coffee mug that says TRADING GOD to be a successful investor.
Your Personality Matters
This is one of the things I think gets overlooked in trading education.
Trading is personal.
If you’re naturally impatient, a strategy requiring you to wait three months for a setup might drive you crazy.
If you’re emotional, a highly leveraged strategy might expose that emotion very quickly.
If you’re analytical, you may enjoy building systems and analyzing data.
If you’re more intuitive, you may prefer discretionary technical analysis.
If you hate being wrong, trading is going to teach you a very uncomfortable lesson.
Because you’re going to be wrong.
A lot.
That’s part of the game.
The goal isn’t to eliminate being wrong.
The goal is to manage being wrong.
Your Life Is Part of Your Trading System
Here’s the bigger idea.
We tend to think of a trading system as:
Entry + Exit + Risk Management
But I think that’s incomplete.
Your trading system also has to include:
Your time.
Your money.
Your responsibilities.
Your personality.
Your goals.
Your emotional tolerance.
Your lifestyle.
All of those things influence what kind of trader you should become.
Imagine building a Formula 1 race car and then discovering you live on a dirt road.
It’s a hell of a car.
It just isn’t very useful to you.
Build the Trader Before You Build the Strategy
Before you spend another $997 on a trading course, another $49 on a scanner, or another Saturday watching somebody explain the “secret indicator” that supposedly predicts the market…
Stop.
Answer these questions.
The Trader Profile
1. How much time can I realistically devote to trading each day?
Not the time you wish you had.
The time you actually have.
2. How much capital am I willing to commit?
And how much of that capital can I afford to risk?
3. What is my primary objective?
Growth?
Income?
Capital preservation?
Speculation?
A combination?
4. What is my preferred time horizon?
Minutes?
Hours?
Days?
Weeks?
Months?
Years?
5. How active do I want to be?
Do I want to make ten decisions a day?
Or ten decisions a month?
6. How do I react to losses?
Do I calmly follow my plan?
Or do I immediately start looking for a way to make the money back?
That’s a big one.
7. What do I actually enjoy?
Because you’re going to spend a lot of time doing this.
You might as well enjoy some of it.
There Is No Perfect Trader
Here’s something else I’ve learned.
You don’t have to choose one box and live there forever.
Your life changes.
Your capital changes.
Your experience changes.
Your goals change.
Your trading style can change, too.
Maybe you start as a swing trader.
You develop experience.
Your account grows.
You learn options.
You begin generating cash flow.
Eventually, your portfolio becomes a combination of growth, income, and risk-management strategies.
That’s okay.
The important thing is that the strategy evolves because you evolve.
Not because somebody on social media told you there’s a new strategy you absolutely have to learn.
Here’s Your Challenge
This week, I want you to write down your Trader Profile.
Don’t tell me what kind of trader you want to be.
Tell the truth about the life you actually live.
How much time do you have?
How much capital do you have?
What are your goals?
How much risk can you tolerate?
What do you enjoy?
What drives you crazy?
What are you good at?
What do you struggle with?
Then ask yourself one final question:
Does my current trading strategy actually fit the answers?
If it doesn’t, you may not need a better strategy.
You may need a different strategy.
Or maybe you don’t need a different strategy at all.
Maybe you need to change your expectations.
That’s the beauty of trading.
There isn’t one right way to do it.
There is only the process of discovering what works for you.
And once you figure that out, you can stop trying to become somebody else’s trader.
You can start becoming your own.
That’s a pretty good place to start.
Trade well.
Leave a Reply