How Personality Affects Trading Style
Singles, Doubles, or Homeruns
When determining what type of trading strategy you should use, you need to know your own personality. While some prefer to day trade or others invest for the long term, no two traders are the same.
Before we dive in, make sure you are subscribed so that you don’t miss any future articles.
When determining your trading strategy, you need to ask yourself are you a singles hitter or a homerun hitter? While the potential return is huge for singles and doubles hitters if you manage to sell at the highs and buy at the lows, it is nearly impossible to do. Swing trading this way can cause you to lose your initial position in a stock and you will likely never get it back. Jesse Livermore said the big money is not in the individual fluctuations but in the main movements. Therefore, trading around a core position is a reasonable compromise if you tend to take your profits too quickly and do not want to be a position trader.
Trading around a core position while swing trading allows you to:
Sell part of your position into strength, with the intention of buying back the shares later if a proper entry occurs
If no proper entry occurs, at least you still have a portion of your original position
While you can be very successful swing trading, the really big money is made in sitting with a stock for its entire move. To quote Jesse Livermore again,
“It was never my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight.”
Often, singles hitters are fearful that they will lose their unrealized gains causing them to sell prematurely to lock in a profit, while the stock will go onto make a big move which would result in a much larger profit. Position trading is a style of trading that takes advantage of these larger moves, while still managing risk.
Position trading allows you to:
Participate in the main movement of a stock
Hold a stock for a larger move until a technical sell signal appears
Thanks for reading! If you enjoyed this article please help support my work by:
Follow me on twitter @smashapalooza16
Share this post using the button below