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"There are two great pleasures in gambling: that of winning and that of losing."
-- French proverb

Continuing my examination of the different trading styles and the personalities that fit most closely with them, this week I'll look at the gambler-impulsive trader.

This trading type likes to be where the action is. People in this group tend to be emotionally driven, following their impulses more than their thinking. This may lead to poor judgment, as they allow their desires of the moment to lead them into hasty action. And what activity begs for hasty action more than the ease and excitement of punching keys on a computer to buy and sell stock?


Gambler-impulsive types tend to view the world as a glittering playground, with all things new and shiny competing to attract their attention. When something does attract them, they may be passionate in following it. This may lead to overindulgence, or at worse,

dependence or addiction. But if it's kept in check, it just keeps them dedicated to their interests.

Because they're impulsive, traders of this type make more than their share of poor choices. Often they later feel sorry about the consequences of these choices and then find themselves trying to undo their mistakes.

They're more interested in hunches, good luck, tips and random coincidences than are those of

other trading styles. It is easy for them to get bored with activities and other people -- they need to feel a high level of stimulation to stay interested. This tends to keep them on the surface of things because, without sufficient excitement, they just can't muster enough patience to stick around and dig deeper.

Besides being the most prone to various addictions, they are the most willing of all the trading types to take risks with their physical and relationship safety, enjoying the adrenaline rush that comes with high risk and high reward. They feel most alive when danger and intrigue are part of the equation.

For the pure gambling type, the distinction between reasonable risk that is adventurous and crossing over the line into foolhardy indulgence is often lost. In fact, they will misperceive and mislabel foolhardy risks as "reasonable." And then they will believe their misperception.


On the plus side, they are open to a wider variety of experiences than the more conservative types. From different foods to foreign travel to multiple viewpoints, they tend to be more accommodating to the novel and strange.

This type is often flamboyant, charismatic and enjoys a measure of popularity with others. These people are often colorful and exciting to be around.

Money Management and Trading

The phrase that best describes the gambler's money management style is "fast and loose." Money tends to come in fast and go out even faster. And it is cared for loosely. They like to spend on themselves and may also be quite generous with others.

Despite loving the pleasure that money can buy, there is often a disrespect or disdain for money itself. Cash may be crumpled into balls, casually laid around the home or office, or stuffed in the pants or purse. For some, fat money clips are popular, where large bills may be peeled off conspicuously to impress others.

Security needs are not highly valued compared with immediate satisfaction of desires. Untempered by the cautiousness of the

obsessive-disciplined or

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doubter-timid types, the gambling type is the big spender who gets gratification out of showing off his or her ability to earn large amounts of money and then spend it lavishly.

If life is a big gamble, this trading type looks for the edge that will win the bet. They can be ruthless in their business dealings with others, taking no prisoners when they feel disrespected or slighted. They don't forget who has taken advantage of them along the way, and take delight in getting revenge when the opportunity arises. But when things are going their way, they are the most likely to make large returns with their risk-taking and to enjoy living on the edge.

Some of the characteristics of this trading type are found in most active short-term traders and especially in those who prefer daytrading and scalping. They like the edge of urgency that goes with fast-paced trading. To the degree that daytrading is an intuitive, moment-to-moment crapshoot, the gambler-impulsive trader wants his or her money on the table.

If too much time goes by without "placing a bet," this type tends to get bored simply watching the quotes go by. They begin to feel like they are missing out on something. The more trades they have going at once, the more excitement they feel. Unlike the obsessive and doubter types, the gambler type is not satisfied with a spectator role. For this reason, intermediate- and long-term investing are not their natural inclination.

Building the Perfect Beast

I believe those who are able to combine the best characteristics of the obsessive-disciplined type with a measure of the gambler-impulsive's ability to pull the trigger and enjoy risk, have the makings to become very good short-term traders.

Put another way, give me a horse with 70% obsessive-discipline characteristics and 30% gambler-impulsive tendencies, and, importantly, with the knowledge of when to draw on which, and you have a horse bred for speed in the sprints, but that will also be in the running in the intermediate and longer distances.

And this horse will know how to run equally well whether the track is fast or in sloppy, post-


, bear market conditions.

Survey: In Jim Cramer's revealing book,

Confessions of a Street Addict,

he mentions the superstitions that he and other professional traders acquire to support their trading psychology. I'd like to hear about your superstitious thinking and habits that relate to your trading, whether you're a pro or just an active trader. Share as much or as little detail as you wish. The juiciest may be included in a future column. As always, confidentiality is assured.

Steven J. Hendlin, Ph.D. is a clinical psychologist in Irvine, Calif. He has been in private practice for the last 25 years, investing for the last 20 years, and actively trading online as a swing trader and long-term investor since 1996. He is the author of

The Disciplined Online Investor

recently translated into Spanish. He is pleased to receive your comments and questions for publication in his public forum columns at, but please remember that he is unable to provide personal counseling or psychotherapy through the mail. has a revenue-sharing relationship with under which it receives a portion of the revenue from Amazon purchases by customers directed there from