Trading Glossary
Comprehensive guide to TPI Trading Personality Indicator and trading psychology concepts
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Core Concepts
1 termsTPI (Trading Personality Indicator)
A trading personality assessment system based on behavioral finance and psychology that categorizes traders into 16 personality types through four dimensions.
Four Dimensions
8 termsSystematic (S)
One end of TPI's first dimension. Systematic traders rely on preset rules and quantitative models for trading decisions, pursuing consistency and replicability while minimizing emotional interference.
Intuitive (I)
The other end of TPI's first dimension. Intuitive traders rely on experience, market sense, and insights for trading decisions, adapting flexibly to market changes.
Short-term (T)
One end of TPI's second dimension. Short-term traders prefer shorter holding periods from intraday to weeks, focusing on technical analysis and market sentiment.
Long-term (L)
The other end of TPI's second dimension. Long-term traders prefer longer holding periods from months to years, focusing on fundamentals and long-term value.
Aggressive (A)
One end of TPI's third dimension. Aggressive traders are willing to take higher risks for higher returns, possibly using leverage, large positions, or investing in high-volatility assets.
Conservative (C)
The other end of TPI's third dimension. Conservative traders prioritize capital preservation, prefer low-risk strategies, and pursue stable returns over high returns.
Rational (R)
One end of TPI's fourth dimension. Rational traders can effectively control emotions, stay calm during market volatility, and execute trades according to their plan.
Emotional (E)
The other end of TPI's fourth dimension. Emotional traders are more susceptible to emotional influence in decisions, may make impulsive decisions in extreme markets.
Personality Types
4 termsSTAR (The Faceless)
Systematic + Short-term + Aggressive + Rational trader. Like a quant fund manager, relies on data and systems, emotionally immune, pursuing alpha. Example: Jim Simons.
ITAR (The Hunter)
Intuitive + Short-term + Aggressive + Rational trader. Like an experienced day trader, relies on market sense and experience to capture short-term opportunities. Example: Jesse Livermore.
SLAR (The Prophet)
Systematic + Long-term + Aggressive + Rational trader. Like a Buffett-style value investor, finds undervalued opportunities through systematic analysis. Example: Warren Buffett.
STCR (The Sentinel)
Systematic + Short-term + Conservative + Rational trader. Like an arbitrage trader, pursuing low-risk stable returns through systematic methods.
Trading Psychology
5 termsFOMO (Fear Of Missing Out)
Refers to the impulsive buying behavior driven by fear of missing profitable opportunities. A common trading psychology bias that often leads to buying at highs.
Loss Aversion
A behavioral finance concept where the pain of losses is about 2-2.5 times stronger than the pleasure of equivalent gains. This leads traders to take profits too early and cut losses too late.
Confirmation Bias
The tendency to search for and favor information that supports existing beliefs while ignoring or undervaluing contradictory evidence.
Overconfidence
The tendency to overestimate one's judgment ability and prediction accuracy. Common manifestations include overtrading, underestimating risks, and not setting stop losses.
Herd Behavior
The tendency to follow the crowd rather than making independent judgments. Particularly evident in extreme market conditions, potentially leading to bubbles or panic.
Trading Strategies
2 termsTrend Following
A trading strategy that profits by identifying and following market trend direction. The basic principle is "the trend is your friend".
Mean Reversion
A trading strategy based on the assumption that prices will eventually revert to their average level. Expects correction when prices deviate too far from the mean.
Risk Management
4 termsPosition Sizing
The technique of determining how much capital to invest in each trade. Good position sizing is core to risk control, helping traders survive consecutive losses.
Stop Loss
A preset exit price that automatically closes a position when losses reach that level to limit further loss. One of the most important risk management tools.
Maximum Drawdown
The largest peak-to-trough decline in account value. An important metric for measuring trading strategy risk, usually expressed as a percentage.
Sharpe Ratio
A measure of risk-adjusted returns, calculated as excess return divided by standard deviation. Higher Sharpe ratio indicates better return per unit of risk.
Related Resources
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