How do you know which trading system suits your personality best?
Is it possible to know? Does it change with time? Do you have to have only one?

I think, the important thing is to ask yourself the question.
Every monday I fill in a question form, that I´ve found in a trading psychology book, The Buddhist Trader, which I btw highly recommend.

Two questions, out of 39:

  • How do I know which trading system suits my personality best?
  • What are the six most important things I need to know about myself  to make the right decision about my trading style?

Every time, I come up with different answers, and I find they get more mature for every week.

Yesterday night, when I read a section about RSI  in  New Concepts in Technical Trading Systems by J. Welles Wilder Jr, it struck me.

I don´t like to trade with a bias.
With that I mean, I don´t like to have an opinion on where the market might be headed, if it´s overbought/oversold or what other indicators might tell you.
For me, it´s all about finding traders that are trapped in a position, might be from former news or a when you see a fakeout and people are trapped short just under a double bottom. Next time it gets to that area, what can you see in the tape? Are you able to spot the panic in those who want to break even?

It´s not only that I think that the trading style gives me an edge, it almost becomes a game. You can feel a smile comming when you see that panic on the tape.

I think you constantly have to ask yourself questions about yourself. I think you have to ask yourself how you would feel if you took a short position yesterday in that perfect breakout, that turned out to be a fakeout. What would I do when that level is revisited?

 

It´s all about asking questions.
You´ll probably come up with different answers every time, but that´s just a bonus!

/J