People are different and so are their trading styles. Some prefer entering positions for a short time, while others would rather choose long-term transactions. Traders have their preferences regarding every aspect of trading, market volatility, investment amount or risk tolerance. Moreover, some will eagerly use the advice of more experienced ones and some will learn from their own mistakes. What kind of trader are you? Let’s see what is the distinction between dependent and independent traders and what are the advantages and disadvantages of each attitude.
Characteristics of two types of traders
A type of trader who we call a dependent trader puts a lot of effort in preparations to the session. He set the chart and the indicators he thinks he might need. Also, he seems to understand what is going on in the markets. But when he is more or less ready to begin trading, he seeks assurance that he is right. So he starts checking various websites or read more about a particular strategy. Then, there are two possibilities. He will either be satisfied and get a confirmation his plan is good, or he will find out that there are better ways and his actions may not work.
If the latter is the case, he drops his original plan and starts all over again. The worst scenario is when at the end he discovers, that he would make a profit only if he stays with his own plan.
We say that a trader is independent when he relies on his own opinions. He does not have to look for confirmation from the outside. He believes in his own knowledge and skills and does not switch from one strategy to another only because someone says the other one is better.
An independent trader is also a disciplined trader. He does not give up easily. Instead, he checks his strategy multiple times to find out whether it is effective or not.
To be an independent trader, you must trust your instincts and you must be confident. Your success lies in your hands only and therefore, you should be able to make decisions on your own.
Types of traders and personality
Get to know yourself, your trading style and preferences. Your actions should be in harmony with your personality. And so you can discover which type of trader suits you better.
Everybody loses sometimes. But people have different risk tolerance and this is a very important component of trading. For those with a low level of risk tolerance, the dependent approach may be more appealing. They do not rely so much on their own opinions because they search for confirmatory information from the outside.
If you identify yourself as a dependent trader, it might be a good idea to build your own network of trustworthy traders. Looking for information randomly can bring poor results. But if like-minded people work together and they support each other, it is possible to develop some kind of system.
Independent traders do not have to work alone, though. It also may be helpful to connect with others. This type of traders is quite confident and so developing appropriate risk management is recommended.
Self-confidence is a very useful feature, however, you must be ready to adjust trading strategies underway. Keep track of your trades, check the economic calendar, and introduce necessary changes.
There is no single right way in trading. Everyone is different and a trading style should be adapted to your needs. Hence the first step is to know yourself. Choose a strategy and stick with it for some time.
Do not expect that a good strategy will work every time. Loses will occur, and you should not distress yourself too much. Keep a trading journal and you will discover very fast what was not working and what needs some improvements.
What type of trader are you? Do you have any comments on dependent and independent types of traders? I will be happy to hear from you. Below, you will find the comments section which is the best place to share your opinion with us.
Best of luck!