Which Type of Trader Should YOU Be?

Hi, Brian McAvoy here with Inside Out Trading. And today I want to talk with you about a question that I get on a regular basis. And it's a very natural question. I'm sure the same one has crossed your mind at least once. And it's really important that you pay attention to this, though, because this is one where it can really trip a lot of people up, especially if you're smarter than average. Especially if you're smarter than average, because this is one where your ego can really, really screw you over. Okay, so what are we talking about? Well, the question that I get is, hey, Brian, should I be a discretionary or a mechanical trader? The answer is never the same. I mean, if you have to have a flat, straight answer, if you just really don't know any other way to decide, go with being a mechanical trader, and here's why. Now, being a discretionary trader is okay, but there are certain things that really need to happen before that's a wise choice. Because you see some of these traders, like seasoned veterans and pros and other guys, they're famous and they're discretionary traders, or they say they're not, but they actually are, even though they're being fairly methodical about what they do. Here's the thing. When you're trading, there's a whole lot that's going on. You've got a dynamic market. I mean, every day, every moment, pretty much the charts are never the same. From one day to the next, the charts are different. They may be subtle differences, sometimes they're dramatic differences from what they were yesterday. But the charts are always changing. They're never exactly the same. And so if we're dealing with a dynamic environment, there's a ton of processing that's going on below your conscious level, a lot of processing. Now, your brain is fantastic. As humans, we are masters, and we're very fortunate. We wouldn't survive if our brain wasn't a great pattern recognition machine. We're really good at recognizing patterns and noticing anomalies or similarities, depending on what's going on. Our brain is constantly working in its pattern recognition mode. Now, here's the thing with trading. Our advantage comes from being able to recognize when we have. There may be a general uncertainty about the markets in general. Yes. Nobody knows from one day to the next exactly what's going to be happening. Nobody knows what the price of gold is going to be tomorrow. For sure, there's an uncertainty there. But there are periods of certainty where a behavioral response pattern in the markets has initiated and now we have a very low level of uncertainty because of the predictability of human nature. And also the programming in the robotic traders, the algorithmic trading programs that are running, There's a huge element of predictability. Now, when we see certain response patterns playing out in the market, something happens. And now there's this recognizable pattern in the marketplace. This is where our entire advantage comes in with trading, is these periods of predictability, moments of predictability, little windows where, okay, there's a response pattern that's initiated. And because I recognize the beginning of this response pattern, I know what's very likely to happen next. And that's our whole advantage as a trader. Now, if you're a discretionary trader, here's where you can get yourself in trouble. If you don't have a lot of time, in particularly a significant period of successful trading where you're identifying and trading these periods of predictability. Well, if you don't have that six months or a year where your brain's just been wired with successful trading and proper pattern recognition and entry and execution of trades, if you don't have all that subconscious programming wired into your head, discretionary trading can be very dangerous. Because now your subconscious processing isn't reliable. It's still all new, and the wiring isn't there. So if you're a discretionary trader without all that success, you're really gambling because it's more those discretionary moments or parts of your system are more invitations for your emotions or hunches to come into play, and it's not reliable. The reason successful discretionary traders are successful is because they have that success wired into their subconscious and it serves them well. Now, until you've had that six months to a year or more of mechanical trading, where the decision making is all happening at a conscious level, your system is very mechanical in how you make your trading decisions. That's what you need to stick with until you get that subconscious wiring done. Is this making sense again? Because if you're a discretionary trader, you may be thinking consciously, but you're relying on subconscious programming to serve you and be doing a proper analysis and evaluation of the information in front of.