What kind of stock trader are you? You think it doesn't matter?  The fact is that each of us would make different amounts of profit on the very same winning stock.  Some of us would jump in too quick, others would jump in too late, and there are those who would not jump in at all.  And that is just the buying decision.  You can say the very same thing about when we would sell.  Some of us would get out with a small profit, others would hold out for more, and yet others would stay in the position way too long.

What this means is that each of us have a different capacity to handle financial risk.  We may be either too bold or we may be too afraid.  Thus, to be successful in the markets, we must know what kind of traders we are and find a stock trading style that suits our personality.

Let us consider this.  If we like to think quite a bit before acting and jumping into stock positions make us cringe, then we are probably best suited for long term trading.  We like to do lots of research before acting.  If we want a little more action and get kind of bored with all the research, we might prefer watching the charts and the price action and take positions based on those factors.  We probably to get a profit and then get out of the postion a litte more quickly than a long term trader. This style is more like a swing trader where we want to profit on the swings that stocks prices make. Finally, if we want the biggest thrill of all then we probably would enjoy daytrading.  This gives us intense action and takes all of our attention.

Regardless of which of these trading styles suit us, we still need to set some rules.  First, we need to determine the criteria that needs to be met before buying a stock.  Secondly, we need to determine the maximum risk we will take on that position and set our stop loss level accordingly.  Thirdly, and most importantly, we need to establish at what point we will sell the position and take profits or cut our losses.  Oddly enough, selling is the most important decision of the entire process, but usually gets the least amount of consideration from most traders.

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