Since 2011, I have been teaching Workshops at the Van Tharp Institute and have learned that the students come from very different walks of life. Naturally, they have different motivations for learning to trade and their trading style can be quite different.
Once the workshop is over, they do develop their individual trading games, customized to their specific goals, that fit their individual life situations. After having observed many different trader types over the years, I can now categorize them into several groups. Your way of trading the markets can vary a lot from someone else who is trading the very same systems I teach. Each type can be very successful in its own right trading the markets.
I learned to differentiate seven main categories from the traders who attend my workshops. The further up on the list, the more workshop attendees I find who fit that description.
The first three categories account for about 50% of attendees. The Trading Novice and Professional make up around 10-15% each while the last two types comprise 20-30% in total.
Let’s have a look at each of those categories now.
This person already has experience trading the markets, probably for many years. They typically trade stocks, ETFs, or Investment funds. Their style is ‘Long only’ and mainly, they analyze the daily charts. Their portfolio might be a selection of great stock picks. Being exposed to the equity markets predominantly in the ‘Long’ direction, this trader looks for trading systems that allows them to use additional market edges in other non-correlated asset classes, ideally in a variety of different lower timeframes.
Motivation: This trader seeks to diversify their trading to generate income from other asset classes and timeframes – both Long and Short. This is generally a good idea as it provides many more trading opportunities especially when the equity markets are going sideways or down. Adding such systems can improve considerably the equity curve and the smoothness for this category of trader.
Trading Game Objective: To trade a portfolio of different systems. To go for the very best market opportunities on a given day or week.
Example: Leo W. (Montana/US) / Full-time trader, see interview “The Retired Systems Guy”.
There are always several people of this type in my workshops. Often this trader is already financially free or nearly financially free as he receives rental income that covers living expenses. That income generates time and space to pursue other business opportunities generating additional income such as trading. The very long-term investment nature of real estate offers traders naturally a good fit due to its shorter-term nature. Coming to the trading game with a secure and serene state of mind is a great edge on which this trader type can capitalize.
Motivation: This trade type looks for an additional income stream that offers unlimited upside potential. Trading is a fully-scalable business. Once mastered, position sizing can be applied in ways that meet the trader’s goal.
Trading Game Objective: To generate an additional non-correlated income stream. Usually, to trade the lower timeframes from the 5-second to the 15-minute charts, often with the intention of “going for the moon” (well above +100R per year).
Example: Kritzo V. (New Zealand) / Civil Engineer, see Panel Talk “The Busy Family Man”.
This trader type might be retired because of age (receiving pension income) or they might have retired because they sold a successful business. Both are looking for new ventures and business opportunities. Because they have a good amount of time available, they can grow very fast in their trader development. Often, pensioners find great joy and satisfaction in excelling in a professional area where they have not been active before, e.g., lawyers, construction managers, or medical doctors.
Motivation: The Retired Trader looks either for an additional income stream to bolster a pension income or seeks new challenges and opportunities. A trader who has sold their business has enough reserves to take the time needed to develop into a mature trader. These traders do not feel pressure on their time and that alone is a big trader edge.
Trading Game Objective: To seek new challenges, opportunities and ventures. To establish a sustainable trading business by achieving weekly/monthly R-goals as consistently as possible.
Leo W. (Montana/US) / Retired businessman, see interview Type 1 “The Retired Systems Guy”David B. (Canada), Retired Lawyer – ex-partner of a law firm (interview to come in an upcoming publication).
This is a very special trader type as the newbie can build expertise on a green lawn. A novice is in the very early stages of trader development so they can grow very fast. It is easy for a newbie to get confused and overloaded but, with proper guidance, a novice can go “off like a rocket” The big edge is that the newbie has no limiting trading beliefs and no emotional charges for trading tasks yet from prior trading experiences. Once the novice has developed confidence in themself, huge leaps in trader development are not unusual. A group of like-minded traders is essential for this trader’s success.
Motivation: Often, the Trading Novice has a strong interest in trading, psychology and spiritual development (or at least is open to all this supporting trading success). They want to learn quickly without spending many years on finding the right way of learning to trade. Trading is a challenge, a big ride of discovery and a big business opportunity for a newbie.
Trading Game Objective: To develop and grow fast. To establish a sustainable trading business by achieving the weekly/monthly R-goals as consistently as possible.
Example: Petra E. (London/UK) / former Lawyer and now Book Writer, see Interview “The Trading Newbie”.
This type of trader is highly focused and motivated to learn, trade, and integrate a new system into their portfolio of existing systems. The Professional looks for a system that is non-correlated with his existing systems in terms of asset class, timeframes, style or mechanics. This trader knows what he is looking for. Having already established a well-functioning trading process, he can learn and integrate a new system quickly. It is not unusual to have fully mechanical traders in class who want to learn a rule-based discretionary system that offers different edges (compared to a fully automated trading algorithm).
Motivation: This trader wants to learn a new system that is very different from the existing ones. To generate non-correlated income as part of a portfolio of systems. Often new ideas for improvements are derived to be applied to the other systems (e.g., components of the exit algorithm).
Trading Game Objective: To learn a new system with an edge, trade it flawlessly and integrate it as quickly as possible. Often with the goal to achieve the weekly/monthly trading goals as consistently as possible.
Example: Samuel Z. (Switzerland) / Full-time trader, see Interview “The Trading Industry Expert”.
This trader type is always looking out for a new opportunity. Trading is a very flexible and fully scalable business allowing for organic growth without the need for additional investments or more staff. These are fantastic business foundations allowing the trader to strive without adding much operating risk. As the trading business grows, a business person will want to focus their professional attention more on trading.
Motivation: Often trading is seen as a new business venture—a true start-up business. Or, trading is seen as a business in a very different sector of activities that brings new experiences, joy and fulfillment.
Trading Game Objective: To begin a new start-up business with huge upside potential. Time is allowed for the learning curve and to grow trading into a real business. Often, either the very low timeframes and/or the higher ones are traded.
Example: Steve S. (USA) / Entrepreneur, see Trader Chat Interview “Treating Trading as a Business”.
This is a very special life situation with its own pros and cons. The parent at home is not always able to plan well in advance which means flexibility is going to be key. They might only have a couple of hours per day or week for trading the markets. For this trader type, trading can be a challenging but easy and very satisfying activity to connect with the world online.
Motivation: The main motivators are to generate additional income and to do something challenging that satisfies the need for variety in life.
Trading Game Objective: To trade whenever time allows. To be flexible with time of the day, timeframes to trade and the different asset classes. Often higher timeframes are traded from 60-minutes and higher.
Example: Rui L. (California/US) / Mom of a teenage girl, see Trader Chat Interview “Successful Trader Development”.
The trader examples above show how a trading business can and should be customized to best fit different life situations. Do you want to trade higher timeframes (such as Rui / type 7) or do you prefer to trade very short-term (such as Samuel and Petra / types 4 and 5)? Do you want to trade full-time like Leo (type 3), or rather go for part-time trading as Petra does (type 4) to pursue other important interests in life?
Whatever Trader Type you are, you want to tailor your Personal Trading Game according to your specific needs. Different trading games can be very successful on their own (see above examples). With the right game, you can considerably increase your quality of life, generate additional income and diversify your risks.
If you are considering or planning to attend a workshop in the future, which category of Trader Type do you think you fall in? How would your Trading Game look in terms of the timeframes you want to trade, the time spent per week and your trading goals?
Note: The systems I teach apply internationally and participants join from all over the world. Both Futures and Forex are true global markets that trade virtually 24 hours a day. Thus, you can trade in whatever time zone/continent you live in at whatever time of the day.
I look very much forward to meeting you online soon,
The Market Rewards You with BigRs, But…
Your Game, Your Rules – Winning Your Trading Game
Independent Trader: Three Keys to Reach Your Full Trader Potential
Trading Visual Price Patterns is a Bit Like Hunting for Fish
How Your Learning Type Determines Success (Part II)
The Trap – And How My Cat ‘Dolfi’ Got Caught
Become the Hunter Yourself
Deliberate Practice and Trading Mastery