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How to find a trading strategy that fits with your personality?

Updated: Jan 13, 2023

Finding a strategy that fits your personality is essential to becoming a consistent and professional trader. People often don’t take the time to work on this. If you trade a strategy that doesn’t fit with your personality, you will never be able to follow it correctly. This means you will be making mistakes that will cost you money. An edge is created by having a strategy that puts the odds in your favor. However, if you can’t follow that strategy your edge goes away. In this article you will learn more about finding a strategy that fits your personality.

For more details on developing a strategy you might want to check out our 1-on-1 coaching.

Finding a strategy that fits with your personality

To become a consistently profitable forex trader you have to go through different learning phases. These phases can be divided as the following:

  • Absorption phase

  • “Analysing yourself”phase

  • Structuring phase

  • Testing phase

  • Reviewing phase

In general, these are the phases every trader goes through. In order to become a consistently profitable forex trader you need to go through all these phases. If you skip one of these phases your chances of becoming a consistently profitable forex trader will decrease. You need to do them, if you skip testing and think you can be profitable without testing sooner or later you will find out that you need to do that phase anyway. So just do it. It might be boring at first, but it’s worth it.

There are some more phases and some things can be slightly different depending on your personality and other factors. However, this is the general path you need to take in order to become a consistently profitable forex trader.

Absorption Phase

During the absorption phase the goal is to absorb as much information as possible. There are thousands of ways to make money in the forex market. The goal of this phase is to get to know a lot of concepts about trading. Start by learning the basics, and then go further. We at CDFX Trading don’t offer any information about the absorption phase. Most of the information regarding this phase can be found for free on the internet, so no need to charge for it. We do however, teach some concepts we use in our trading that you can use as well.

“Analyzing yourself” phase

During the “analysing yourself” phase, you have to analyze yourself. What type of trader do you want to be? Do you want to be a day trader, a swing trader, a position trader, a scalper? There are a lot of different ways you can trade. Figure out what you like and what fits with your schedule. If you have a fulltime job it’s very hard to be a day trader. You might want to start of with swing trading if this is the case. During this phase you also want to analyze your personality. Within trading there is mechanical trading, systematic trading, automated trading and discretionary trading. What do you like? What fits with you?

Find out what fits with your personality. If you are someone that likes structure and facts, you might want to go for a mechanical strategy. If you can cope with subjectivity, you might want to focus on a discretionary strategy. We at CDFX Trading trade a strategy that’s 90% mechanical. This mechanical part has an edge in and of itself. We use 10% discretion to improve our performance, because some concepts we use are not mechanical but do increase performance.

The bottom line is, analyze yourself and figure out what fits with your life, your personality and your interests. There is no right or wrong way to trade.

Structuring phase

The next phase is about structure. During this phase you are going to get rid of the things that you don’t like and don’t understand. You are going to analyze each piece of information you gathered and decide if you fully understand it and if it fits your personality. By doing so, you cut out the things that don’t fit with you and you will be playing to your strengths. It is very important to find out what your strengths are and to use those in your trading. You are trading with big banks, every 1% you can gain by playing to your strenghts brings you closer to your goal. If you skip this step you will be hopping from concept to concept trying to be a jack of all trades, but master of none. Focus on your strenghts and master a few concepts. This is how you become a consistently profitable forex trader.

Testing phase

A vital part when it comes to becoming a consistently profitable forex trader is to test things out. Testing things out can be done in different ways, but skipping this part, which most people do, will bring your chances of becoming a consistently profitable forex trader almost down to zero. Once you have figured out what you like and what your strenghts are you are going to test the things that you have learned. This can be done in different ways and totally depends on the approach that you choose (mechanical, discretionary, systematic). If you want to know how to decide what the best way of testing is for your particular concept or strategy you might want to check out our 1-on-1 coaching, as we go deep into backtesting.

You want to test your strategy the best way possible. This can be done via backtesting, forward testing, demo trading and live trading. Again, you need to know what the best way is for you. When testing the strategy you want to keep track of the results. Test your strategy or concept over years of data and 100’s of trades to get an idea of the potential performance.

You also want to test different parameters suchs as different management techniques. During your carreer you will have to keep adjusting and testing new things to try to improve your excisting strategy. This is completely normal and should be viewed as something fun to do. Trading and developing a strategy is a never ending puzzle. This is one of the reason that I, the founder of CDFX Trading, started trading.

Reviewing phase

Next is the reviewing phase. During this phase you are going to review all the data you collected during the testing phase. You are going to figure out what works and what doesn’t. The goal is to confirm a statistical edge as well as giving you confidence by providing data. By carefully reviewing you can figure out if what you are doing had an edge in the past. This is vital to becoming a consistently profitable forex trader.

The reviewing and testing phases are two phases that you will be doing your entire carreer. There are always things you can improve. In order to improve you need to test these things out and review them. That’s why a trading journal is so important. You should have one. You should also have a routine of testing things out regularly. If you are not improving your edge will most likely go away. So, get a proper journal and make it a routine to test things out and review them, it’s the only way to become a consistently profitable forex trader.

It is important to enjoy the process of testing and reviewing. So, make it fun. Trading is all about the process, if the process is right the results will follow. Reward yourself when you have finished a testing project. Keep it fun. Yes, trading is a job but that doesn’t mean it can’t be fun. The more you enjoy it the better you will be able to stick to it. This means your outcomes will also be better.

Wrapping things up

In order to become a consistently profitable forex trader you need a two things. An edge and a flawless execution of that edge. The only way you can get that flawless execution is by trading a strategy that you fully understand and that fits with your personality. This is something you should not take lightly. Most educators won’t tell you this because they want to sell their strategy and make money.

Everyone is different, so everyone needs a different strategy. Yes, you can learn concepts from someone, but you always need to adjust them slightly to be able to trade them profitably.

To find a strategy that fits your personality you need to know your personality. So, start by analyzing yourself. Once you have done that, go through the steps in this blog. When you take action on all those steps you will be a few steps closer to your goal of becoming a consistently profitable forex trader.

In order to become you a consistently profitable trader you need a few things. One of these things is having a strategy that fits your personality. You know now the steps to get that strategy. Please enjoy this phase of your trading career & good luck. If you have any questions feel free to contact us.

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