Tony McCoy, the multi-award winning jockey, once said in relation to horses that, “Horses are like people – they have different personalities. They can be nice, friendly and hard-working, or awkward, difficult and lazy. If horses were people, some would be on the dole, and others would be entrepreneurs.” Looking at this in reverse, if people were horses, some would be content to graze in the field all day, whilst others would be of the wild variety, loving nothing more than galloping through the forests and exploring the world.
This will probably come as no surprise, but the world of trading also has many different personalities, and the ways in which they choose to trade differ enormously. Here we’ll attempt to build two stereotypical personalities, each of whom will naturally gravitate to a particular type of trading technique. Don’t feel offended if this doesn’t describe you accurately; we can always build a future model specific to you.
Person A “Trading the Market” – Ready to Act, Short-Term Goal Focused
Imagine person A. Slightly impatient, this is the type of person who needs their family out of the door 10 minutes before they need to be, and starts to panic if they’re running slightly late. If a queue at the supermarket isn’t moving forward, or they find themselves behind that dreaded indecisive octogenarian at the bank, behind that inscrutable expression lies a raging desire to scream out loud, or perhaps take physical action. This person isn’t content to wait patiently when the taxi driver decides to adhere to the speed limit, but is quietly fuming at his sheer misfortune. This is a person for whom trading the market is ideal. This method allows them to react instantaneously to the changing trends that are occurring, and to instantly dismiss from their portfolio of investment any assets that are performing disappointingly.
Person B “Trading the News” – Ready to Wait, Long-Term Goal Focused
Person B. Person B watches on with a slight amount of amusement as person A quietly bubbles into an exploding volcano, finding the whole episode rather amusing. They have no issue with waiting to queue in the supermarket, secure in the knowledge that within a certain amount of time, they will have purchased the contents of their shopping trolley, and will proceed with the day. This is also a person who knows that no matter what, the airplane will not leave without them, and there is no necessity to be seated in their seat 30 minutes before the departure time. This is a person who takes a longer term look at things, and is less likely to be swayed by the sentiment on a given day. They’ll study the news and prevailing strength of an asset carefully, and the odd move up or down won’t dissuade them from their long-term goal.
In truth, these two people would find each other unbearable, but in the world of trading, they both exist. The key is finding out which type of horse you are, and deciding whether you’re a grazer, an explorer, a jumper or a racer.
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