The Different Types of Traders

I always enjoy the market cycle, especially the constant repeating of specific behaviors in the way people put their money to work. It simply never ends, it just keeps repeating. It’s rather fascinating, all things considered, that we’ve made a trading system that continually exploits the same behaviors, over and over, for at least 100+ years since modern western markets opened.

The three most exploited behaviors are as follows:

1. FOMO: Fear of missing out, new traders chasing hot tips and news cycles.
2. Pump & dumps: New traders getting enticed to join a game of hot potato whereby only a few actually succeed, and everyone else suffers on the way down.
3. Impulsive trading: You have a shiny new app on your smartphone and it’s just so easy to press buy & sell, so new traders do it 100x a week, paying the coffee and dinner bills of a more savvy algorithmic trader.

Nevertheless, the motions continue, the behavior repeats and I’ve outlined it below in my chart. Spend enough time in markets, keep learning, keep going, and you will one day reflect on the fact you’ve experienced all of these instances, at least once, but ideally, after many years, you’ve found a strategy that consistently gives you an edge above the rest:

Note: I have NO opinion at GameStop at this time and who knows where it goes next, but the chart is really a case study for markets, now and for much longer.

Written by Stefan Cheplick, a fintech builder and writer with experience at Stocktwits and TradingView. Background and published work.