Chapter 2
Identifying What Kind of Trader You Are
Now that we know the importance of screening and backtesting, the next step is to identify what kind of trader you are (or want to be). This will make sure that you’re getting into the right kinds of strategies and stocks for you.
The first step in identifying what kind of trader you are is to ask yourself some questions. What’s interesting is that, often when I ask someone what kind of trader they are, they’ll immediately say they’re a growth trader or a value investor, and so forth. But when they stop and review the answers they’ve given themselves, it turns out they’re completely different than the kind of trader they thought they were.
Here are three great questions to ask yourself to help you identify what kind of trader you are.
Question 1: What Kinds of Stocks Do You Want to Invest In?
This first question is intentionally broad, but it’s a great place to start. Once you’ve indentified the kinds of stocks you’d like to trade, you can then learn about what style of trade these types of stocks fall into. And knowing what types of stocks you’re looking for will make the process of finding them that much easier. So first things first.
Are you looking for:
- High flyers and fast movers?
- Stocks with big earnings momentum or aggressive growth?
- Maybe solid companies with dependable growth?
- Perhaps mature companies with income producing dividends?
- Or deeply discounted or undervalued stocks?
There are a lot of different types of stocks ...
