10 Questions to Determine What Type of Trader You Are

10 Questions to Determine What Type

of Trader You Are: A Prerequisite to

Becoming a Successful Trader By Jaime Johnson

Copyright © 2014 by Jaime Johnson

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

Copyright 2014, www.NoBSFXTrading.com Page 3

To become a successful trader is a journey. To successfully complete this

journey you must learn many things about trading, but more importantly many

things about yourself. All traders are not created equal, we are all different, with

different personalities, different strengths and weaknesses. Once you realize this,

once you determine what type of trader you are, you will know what path to take.

You will know what type of trade set-ups to take that best fit your personality.

The following pages ask the trader 10 questions to determine what type of trader

he or she is. Needless to mention, honesty is key. The most dangerous person in

the world is a liar, especially the person who lies to his or herself.


Short But Sweet and a Little About Me

This is an extremely short e-book, probably closer to a pamphlet, but the

information in these few pages can change your life, or at least change your

trading career no matter what stage it is in. The information in this book did

change my life. It turned me from a breakeven trader, to a consistently profitable

trader.

Before we start to make you a consistently profitable trader, a little about

me. My name is Jaime Johnson and I have been trading since the late 90s. My

step-father is Robert Miner, a trading guru and the founder of Dynamic Traders

Group. He has been educating traders in his successful style of analysis and

trading for over 25 years. After accomplishing many things in the trading world,

such as winning the World Cup Championship of Trading and developing his own

trading software, he decided to take on a new challenge. He decided to train a

complete blank slate to any other styles of trading to see if he could turn that

blank slate into a successful trader. That’s where I came in, the blank slate.

I did read Robert’s first book Dynamic Trading and started trading in college

when I was getting my degree in Biochemistry/Cell Biology at the University of

California, San Diego. When I graduated, I started working in a lab and continued

to trade stocks and ETFs using what I learned in Robert’s book. I found myself

having a decent trade record and Robert was impressed with my quick learning.

However, not really understanding trading psychology, I was pretty much

breaking even. Then financial hard times hit the biochem company I was working

for and I was laid off. It was the best thing to happen to me in my life. Robert

approached me and asked if I would like to learn a lifestyle where I can live and

work where and when I want to. While sounding too good to be true, this is when

I let him take me under his wing.

To make a long story short, after Robert personally trained me, not only did

my trading results dramatically change for the better, Robert approached me with

a job opportunity. Robert being a futures trader, was the author of the Dynamic


Traders Futures Report. He wanted to know if I was interested in co-authoring a

Stock and ETF advisory report with him. Of course I was interested. At this time, I

was also successfully trading the FOREX markets using the same approach and

analysis. Not too much time later, Robert then approached me about co-

authoring a FOREX report with him. I then became the Chief Trade Strategist for

Dynamic Traders Group.

Since then, I have written numerous trade articles and developed my own

educational trading material. The latest are the NoBSFX Trading Workshop, the

NoBSFX Daily Reports and the NoBSFX Net Trend Video Reports. I also continue to

trade on a daily basis. I am currently living my dream of living and working when

and where I want to and this dream becomes easier everyday with the spread of

communication technology. I currently live in the beautiful city of Medellin,

Colombia.

Enough about me, let’s determine what type of trader you are:


10 Questions To Help Determine What Type of Trader You Are:

Question 1: Are you starting your trading career or consider yourself a

beginner? Many people have these dreams of grandeur of becoming a successful

trader right off the bat (even worse, a successful day trader), but the truth of the

matter is trading is a learning process. For that matter, trading is an ongoing,

continuous learning process. The quicker the novice realizes this, the more

successful he or she will be.

Question 2: Do you have a full time job or for any reason cannot

continuously watch the markets? Even if you are occasionally able to check the

market at your job, it does not mean you can continuously watch the market.

Many employers frown upon trading during office hours, so until you have proven

with your trading that you do not need a job, it is not a good idea to jeopardize

your job.

Question 3: Do you have a low tolerance for stress? Like anything else in

life, especially with your health, the less stress the better. However, totally

eliminating stress in life is an improbability. However, in the world of trading you

can choose certain types of trade set-ups depending on your stress level.

Question 4: Do you think trading is a form of gambling? This is an

extremely important question. Many people, especially non-traders, consider

trading a form of gambling. Even worse, many people use trading as a

replacement for gambling…. very dangerous! Many “gamblers” do not gamble to

make money, they gamble for the euphoria of winning or dysphoria of losing. If

this is the case for you, don’t trade, instead go to a casino, at least you will get

free drinks. If you are going to compare trading with gambling, compare it to


poker. Poker and poker players have the closest characteristics to traders….and

while you are at it, go ahead and take a listen to the chorus of Kenny Rogers’ the

“Gambler”.

Question 5: Do you question yourself and your trade strategy after a

string of losses? I am not sure about the statistics of other traders, but I am

confident they are similar to mine. About 50% of my trades are breakeven or

small gains (I tend to quickly adjust my stops to breakeven to eliminate capital

exposure), about 35% of trades are losses, and 15% of trades are more

significantly profitable. So how do I make money? My losses are relatively small

and profits are relatively large. The profit of a winning trade can easily cover the

loss of five or more losing trades. But here is the zinger and the difference

between successful and non-successful traders, you must be able to stomach a

string of losses that may occur before that winning trade.

Question 6: Do you get emotionally involved with your trades? If it were

plausible, I would advise a lobotomy before beginning to trade. As stated above,

many people like to gamble for the emotion. This is suicide in the world of

trading. The least emotion put in a trading decision, most likely the better the

outcome, especially in the long run.

Question 7: Does a winning trade bring you extreme happiness or

arrogance? If yes, this is extremely dangerous. Making some money in a trade can

bring the sense to the amateur that he or she “knows it all” or has “figured it

out”. This can result in extremely stupid decisions such as taking trades that

he/she shouldn't because how can the market go against a person who “knows it

all”. Worse yet, not using stop-losses or ignoring a money management plan can

be the result of taking a winning trade to your head resulting in a devastating loss.


Question 8: Does a losing trade bring you sadness or extreme

disappointment? If yes, this is also dangerous and can result in two things.

Sadness or extreme disappointment following a losing trade can result in the fear

to take another trade or even worse, the desire to make up for that losing trade.

Making desperate decisions to make up for a loss can have the same results as

mentioned above, ceasing to use stop-losses, ignoring a money management

plan, taking bad trade set-ups resulting in devastating loss.

Question 9: Do you lose sleep over trading? Sleep is one the most

important things for your health and well being. If you are losing sleep over

trading you are probably trading too large of a position.

Question 10: Does watching the market put you on an emotional roller

coaster? If you continuously watch the market and every uptick in the market

makes you happy (assuming you are in a long position) and every downtick brings

negative emotion, I have one thing to say…. DON’T CONTINOUSLY WATCH THE

MARKET. Set your stops and limit orders, step away from the computer and carry

on with your life!!!! Isn’t trading supposed to bring freedom? Also, as mentioned

above, the less emotion you bring to this business, the more successful you will

be.


What Type of Trader are You?

If you answered yes to any of the 10 questions you are a Type 1 trader.

Type 1 traders should take higher probability trade set-ups. Trade set-ups that

have made at least an initial signal your analysis is correct, even though these

trade set-ups usually come with higher capital exposure. Type 1 traders should

also trade higher time frames, the 60 minute time frame or above. Also, very

important, Type 1 traders should not continuously watch the market.

If you are not a Type 1 trader, you are a Type 2 trader. Type 2 traders are

generally more advanced than beginners. They have had success in trading and

understand and accept the risks of trading. They understand trading is a business,

not a get rich scheme. Type 2 traders can stomach a string of losses without

questioning themselves or their trade strategies. They trade with little or no

emotion. A loss affects a Type 2 trader no more or no less than a winning trade.

Type 2 traders are able to trade set-ups with lower capital exposure, but realize

they are usually lower probability trade set-ups. They can also trade set-ups with

VERY LOW capital exposure, but with tremendous profit potential. They can also

trade lower time frames, however, do not need to.

All beginners are Type 1 traders, but not all Type 1 traders are beginners. In

other words, you may have the characteristics of a Type 2 trader, but choose to

take Type 1 trade set-ups for lifestyle reasons or just prefer higher probability

trade set-ups (which usually come with higher capital exposure) in higher degree

time frames.

There is not an average time period a Type 1 trader becomes a Type 2

trader. Some Type 1 traders never become a Type 2 trader which is okay, you can

become a successful Type 1 trader. Actually you should not strive to become a

Type 2 trader. The longer you trade you should be able to intuitively tell yourself

if you should become a Type 2 trader. If you force yourself to become a Type 2

trader you will probably become an unsuccessful Type 2 trader.

Regardless of what type of trader you are, in order to be successful in this

business you must always use stop-losses. The #1 rule of trading is capital


preservation. NO CAPITAL, NO TRADING. You must always use 100% objective

trade entry and initial stop loss placement strategies. Exit and stop-loss

adjustment strategies don’t need to be 100% objective, but your entry and initial

stop-loss placement strategies must be. When you use 100% objective entry and

initial stop loss-placement strategies you can calculate your capital exposure and

maximum amount you can lose in that trade. By knowing this, you can then apply

it to your money management plan, also a must have for a successful trading

career. Trading is a business, in order to be successful in this business or any other

business, you must use a money management plan. Probably the single most

important quality of a successful trader is discipline, trade strategies are useless if

you don’t stick to them.

Once a trader becomes successful and starts to consistently make money

there is a common psychological roadblock. Regardless if you a successful Type 1

or Type 2 trader, you must not feel guilty for “leaving money on the table”. A

trader very rarely buys at the bottom and sells and the top and when a traders

exits before the top, there is a feeling of guilt that more money could have been

made. Forget this, clear your mind and prepare for the next trade set-up.

I Know What Type of Trader I am, Now What?

While figuring out what type of trader you are can be one of the most

important discoveries in your trading journey, once you do, now what? Now you

know what type of trade set-ups you can and should take. All successful trade set-

ups have the same basic structure and principles, but Type 1 traders should take

higher probability (usually with higher capital exposure) trade set-ups which are

usually less stressful trade set-ups. Type 2 traders (who are more experienced

and/or are better with dealing with stress) are able to take lower probability

trades set-ups, with the lower capital exposure.


While knowing what type of trader you are is extremely important, it is only

the beginning of the trading journey. To become a successful trader you also need

to learn a plethora of other things and to just name a few:

- Money Management

- Trends vs. Countertrends

- Dual Time Frame Trading

- Multiple Unit Trading

- Entry, Exit and Stop Placement and Adjustment Strategies

- Oscillators/Momentum

The trade strategies I use and teach focus on multiple time frames trading

in the direction of the higher degree time frame trend. Trend direction is

determined by the higher time frame momentum indicator. I always trade

multiple units and I only take trades with acceptable capital exposure with high

profit potential.

While I trade mostly FOREX and the lessons, trade strategies, etc. I teach

use FOREX examples, the FOREX market as well as any other markets are just bars

on a chart. In other words, everything I teach can be used in any market you

trade, from stocks to futures to mutual funds and everything in between. They

can also be applied to any time frame from one minute charts to monthly charts.

Continuing Your Journey

Now that you have determined what type of trader you are, it is now time

to learn trade set-ups for YOUR type of trader. While you can go in many

successful directions for a successful trading career, I want to offer you my

approach and concepts that have taken me on my successful path. Since you have

already learned what is in the first section of the NoBSFX Workshop, I will give you

an extra month of any membership which includes the NoBSFX Trading

Workshop. Once you subscribe at www.nobsfx.com, send me an e-mail at

[email protected] letting me know you have read this e-book and I will

http://www.nobsfxtrading.com/index.cfm?ref=ebook

mailto:[email protected]


add the extra month. Remember, the membership must include the NoBSFX

Workshop which will put you in the correct direction to a successful trading

career. If you want to try any of the other NoBSFX memberships, I will give you an

extra week to any monthly membership and two extra weeks to any quarterly

membership.

If this is where we part ways, I want to say thank you for having taken the

time to read this e-book and I wish you a very successful trading career.

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10 Questions to Determine What Type of Trader You Are