(ThyBlackMan.com) If you’re new to the world of trading and investing, you may not even realize there are different strategies and approaches you can take. There is no one path to investing in stocks, and often, the approach you opt to work with is going to be a reflection of not only your financial resources and whether you’re generally looking at short or long-term returns, but also your personality.
Knowing and implementing a defined strategy is important because otherwise you risk going overboard and throwing money in every direction, hoping something sticks. At the same time, without a strategy, you could be too conservative and do yourself a disservice in terms of finding exciting opportunities.
Below are some tips that can help you identify the strategy you’re predisposed to favor, and at the same time. When you understand these key elements of your personality, it can help you identify the right strategy for you, or show you where you should make some tweaks to maximize the outcome.
What Is Your Decision-Making Style?
There are two main decision-making styles among most people. The first group of people are the ones who make careful decisions that have been thought out over a relatively long period of time. Then, on the other hand, there are those people who are more impulsive with their decisions or go on gut instinct. You may be a mix of both, but ultimately, one characteristic or the other is likely to dominate. Understanding how you make decisions is essential to also uncovering your signature trading style. Those traders who work based on intuition are often called scalpers, whereas the people who take their time and make more logically-driven decisions are long-term investors in most cases.
Are you Anxious or a Risk-Taker?
If you’re anxious, your trading strategy is more likely to be based on conventional moves and safer options like mutual funds. You may also tend to invest smaller amounts of money at any one time, and diversification is one of your primary focuses. If you’re a risk-taker, you’re probably more willing to go out on a limb and try new things in your trading, whether that’s investing a sum of money in one company you believe in, or going with an unconventional trading strategy like Timothy Sykes’ penny stock trading methods.
Do You Like to Rely on Others?
In general, people tend to either be willing and open when it comes to listening to feedback from experts, or they’re simply not. People that are not tend to rely only on themselves in crunch time and the thought of relying on anyone else for guidance or decision-making isn’t one that works well for them. If you’re someone who will listen to other people, you may want a managed trading strategy, where you sit back and have little to no input with what’s happening. On the other hand, if you want to be in charge of your trading, your strategy may be more depending on checking in weekly or even daily, and this may end up being a more short-term approach.
What’s important to note is that while the above may be indicators of how you’re currently trading, it doesn’t mean this is how you always have to trade. If you see issues within your personality that are having an adverse impact on your trading, you can use this knowledge as a way to try different approaches until you find one that works for you. Being self-aware is a significant part of building an ideal trading strategy.
Staff Writer; Shaun Pope