Date: 1/30/2023
Author: Chris Hood
Do you consider yourself conservative?
And no I’m not talking politics here. Those should have nothing to do with trading.
I want to know the level of risk you’re comfortable with.
I’ve found that different traders can be lumped into three general categories – conservative, standard, and aggressive.
Sure, any classification will have exceptions.
For example, I consider myself a conservative trader who focuses much more on high-probability trades. I hate losing money, so I turn down dozens of potential trades every day.
I’m inclined to hold onto what I have rather than chase potential gains.
But once in a while, I will take a risky trade.
Ask yourself these questions and find out which type of trader you are.
Since the dawn of Rogue Investing Daily, Mr. X has been keeping his readers one step ahead…
Forecasting picks with returns of 390% in under a year, 442% in less than a month, and 1,154% in 16 months, and urging subscribers to hold back from any new crypto investments right before the crypto bear market.
Stay ahead of market shifts and save 70% today.
Click the link here before it’s too late.
First, let’s look at the conservative and aggressive.
You may fall squarely into one of these two types, but if your answers are about 50/50 between the two consider yourself standard.
Conservative traders tend to:
- Risk a smaller amount of capital on each position (0.5 – 1% of their account value)
- Wait for confirmation before placing any trade setup
- Focus entirely on high-probability set-ups
- Use less of their total account capital for trading
- Scale into and out of trades methodically
- Use tighter stop losses
- Minimize volatility and protect positions with hedges (insurance trades)
- Avoid unlimited risk strategies (such as naked puts)
- Take profits earlier on credit spreads and iron condors (40 – 60%)
- Take profits sooner rather than hold out for home run wins on calls and puts
If you answer yes to most of these then you’re more likely similar to me in your style.
On the other hand, aggressive traders are more likely to:
- Risk a greater amount of capital on positions (up to 10% or more) in some cases
- Enter trades without confirmation in hopes of catching the early part of the move
- Risk capital on lower probability set-ups
- Use more (or all) of their account capital to trade
- Place larger positions at the beginning of trades and hold for large gains before scaling out
- Give their trades more room with wider stop losses
- Avoid hedges and insurance trades and tolerate much higher portfolio volatility
- Use unlimited risk strategies like naked puts and calls
- Hold out for higher profits on credit spreads (from 80 – 100% of max gain)
- Let a trade run for higher profits rather than taking money off the table early
Some people just have an appetite for risk so maybe that’s more your style.
There is no one-size-fits-all recipe for profitable trading. You can make a career out of this regardless of your style.
If you’re conservative you make profits more slowly, but suffer fewer drawdowns. And if you’re aggressive, you’ll tend to win more, but have to contend with more and larger losses.
Use this as a guide to help troubleshoot your performance.
If you’re using a style that isn’t consistent with your personality and skill it may hinder your bottom line.
And if you’re struggling for consistency then consider what changes you could make in your style.
Cheers,
Chris Hood
PS – Don’t miss out on what could be the opportunity of a lifetime. Many analysts believe this is just the start of a new bull market in oil. In fact, Goldman Sachs says: “Oil will roar higher. ” Stating this new bull market in oil could easily last a decade. Will you be part of this, or one of those who gets left behind?
