If ever you have struggled with successful trading chances are you have yet to find your trading personality. Being a trader and building a life around the markets involves having the right expectations. It involves understanding your trading personality and aligning it with your preferred trading style and lifestyle. In this article we will dive deep on this topic and will discuss :
- Different timeframes for trading
- Expected drawdowns per timeframe
- The stress factor associated with trading frequency
- Building a life around your trading routine
- Expected returns and realistic expectations
Let’s jump right in.
Different Timeframes for Trading
Trading time frames vary from short-term to long-term approaches. Scalping and day trading involve short-term trades that can last minutes to hours, focusing on capturing small price fluctuations. The primary charts to use are the 1minute 5minute and 15minute as well as tape reading [link].
Swing trading involves holding positions for a few days to weeks, aiming to capture larger price moves. Short swing trades last under 2 days and the longer ones can last up to a month. This is my preferred style of trading as it is low maintenance and can be done with a full time job.
Position trading takes a long-term approach, with trades held for weeks to months or even years. This is best coupled with fundamental trends.
Selecting a timeframe that suits your personality and lifestyle is crucial for sustainable success.
Expected Drawdowns per Timeframe
Each trading time frame comes with its own expected drawdowns.
Short-term traders typically experience more frequent and smaller drawdowns due to placing more trades. While long-term traders may experience infrequent but potentially larger drawdowns.
A profitable trader should have positive expected value on their trades. The more trades taken, the faster the expected value should be reached thus the shorter time frame traders typically have drawdowns that are shorter lived due to a larger volume of trades.
Understanding and accepting the expected drawdowns for your chosen timeframe is essential to managing your emotions and sticking to your trading plan.
Stress Factor
Trading frequency can impact the stress level experienced by traders. The more trades placed the higher the uncertainty will be as well as the overall risk. The trader taking 3 trades per day is risking more then the one taking one trade per day in terms of R multiple [link].
Higher trading frequency, such as day trading or scalping, requires constant monitoring of markets and quick decision-making, which can be mentally and emotionally demanding. It will also require more trades as well.
Conversely, lower trading frequency, such as swing or position trading, allows for a more relaxed trading experience. It is important to assess your stress tolerance and choose a trading style that aligns with your personality.
Building a Life Around Your Trading Routine
To achieve a balanced lifestyle as a trader, it is crucial to build a life around your trading routine. Establish a structured trading schedule that accommodates your personal and professional commitments.
If you are working with a full time job and have expenses, swing or position trading will be a safer way to trade and not give up the safety net of a job. If you’re not sure how to do this check out this article. If you do not have many expenses or have spare time and love action, day trading may be best suited for you. I would not recommend day trading without some form of experience in the markets. I wrote a complete guide on day trading for more information.
It’s important while trading to prioritize self-care. Proper rest, exercise, a healthy diet, socializing and hobbies. Trading on its own is not your entire life. It is important to have balance to avoid the risk of burnout. Cultivate a supportive environment, surround yourself with like-minded individuals, and seek mentors or trading communities to share experiences and insights.
Expected returns and realistic expectations
Expected returns vary based on trading style, market conditions, and individual skills. Day trading and scalping strategies may aim for smaller but more frequent gains, while long-term strategies focus on larger returns over time.
It will take some time to be a profitable trader if you are new and more time to be able to trade for a living. It is important to understand that even the best traders have drawdowns so be prepared for this. FOllow the process and the results will come.
Final note
Overall, finding your trading personality will help you succeed in trading around the challenges of life.
By having the right time frames for trading, correct drawdowns expectations, stress factor, routine and realistic expectations you can find success.
Trading is a game of finding what works best for you and making it work within the market. It will teach you so much about yourself so always keep an open mind!
Trade Safely !
Andrew AKl
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