shutterstock_52706002Market trading can be a complicated process. Some traders apply technical methods in order to achieve better results and profits. But others rely on simply on gut feeling and gambling their way to more losses. There are different types of traders out there. Some traders follow an efficient system while others simply do it by way of making as many trades as they can. Overtrading can be a very risky method of making money in market trading. There are certain types of overtraders out there. Here are some of them.

Hair-Trigger Trader

This type of trader reacts to even the slightest changes in the market. Thanks to electronic trading, hair-trigger traders are given the opportunity to act upon their decision in an instant. Even at the slightest change, traders can sell a position. Hair-trigger traders are characterized by traders with positions that exit as long as they are entered. Hair-trigger traders are also indicated by a higher number of small losses along with fewer winning trades.

Bandwagon Trader

There are also traders who think it wise to go with the flow. Bandwagon traders are types of traders who try to follow the trading crowd, especially those they perceive as the expert traders. They believe that following these “expert” actions to also gain the same profits. But following the crowd may not always be effective. In fact, when traders follow what other traders are doing, the opportunities may have already passed. What is also more important to consider is that bandwagon activities can also affect the market opposite of what such traders may expect. A high volume of traders who enter a certain position at the same time can have an effect on price.

Shotgun Traders

There are also traders who just want to be on the action and trade based on their gut feeling. Shotgun traders try to enter into multiple positions with the belief that diversification may help lower risk. But shotgun traders usually focus on multiple positions on the same market and asset class, which defeats the purpose of true diversification. One more thing to consider is that multiple positions do not necessarily lead to more winning trades. There are other factors to consider when making trades other than just gut feeling and a sense for more action in the market.