The Handbook of Technical Analysis + Test Bank_ The Practitioner\'s Comprehensive Guide to Technical Analysis ( PDFDrive )

Trader Risk Profiling and Position Analysis

26.2 Aggressive and Conservative Market Participation

There is much confusion when traders or investors refer to being aggressive or

conservative when participating in the markets. As you will see, in most cases the

participants are neither completely aggressive nor conservative in behavior, but

are in most cases a combination of both.

Scenarios where the market participants are both risk seeking and risk averse

with respect to price and time, occur in

■ (^) Long entries taken below resistance in an uptrend
■ (^) Short entries taken above support in a downtrend
■ (^) Long entries taken just below a failed support
■ (^) Short entries taken just above a failed resistance
Scenarios where the market participants are risk averse with respect to both
price and time occur in:
■ (^) Very early short or long entries with respect to support or resistance
Scenarios where the market participants are risk seeking with respect to both
price and time occur in:
■ (^) Very late short or long entries with respect to support or resistance
■ (^) Very early or premature long entries above support in a downtrend (both
aggressive)
■ (^) Very early or premature short entries below resistance in an uptrend (both
aggressive)
behavior profile for entries
There are basically three elements to consider when trying to determine if a mar-
ket participant is aggressive or conservative on entry:

1. Market participants can be aggressive or conservative in their time of entry


2. Market participants can be aggressive or conservative in their price on entry


3. Market participants can be aggressive or conservative in their risk size at entry

behavior profile for exits

Similarly, there are three elements to consider when trying to determine if a mar-

ket participant is aggressive or conservative on exit:

1. Market participants can be aggressive or conservative in their time of exit


2. Market participants can be aggressive or conservative in their price on exit


3. Market participants can be aggressive or conservative in their risk size at exit