HOW CAN YOUR PERSONALITY AFFECT YOUR TRADING?
How Can Your Personality Profile Affect Your Trading?
When you first start forex trading, you’ll find that there’s a very steep learning curve – and it might be some time before you start seeing serious returns on your investments consistently.
This can get a little bit frustrating, of course, as no one likes to lose… but the good news is that FX trading isn’t just about bringing in the big bucks and the journey is just as important as the destination for many traders out there.
What you might not yet have considered, especially if you’re just starting out with trading currency pairs, is that you’ll learn a huge amount about yourself as you trade and, in fact, this knowledge can be turned to your advantage and make you an even better trader… which is when you’ll start to see more positive winning trends over time.
Knowing what makes you tick, what your weaker areas are, where your vulnerabilities lie will only serve you in excellent stead as you progress in your trading career.
Identifying your strong points and your failings will show you exactly where you need to focus your attention and what needs the most work from a trading perspective.
So how do you go about finding out all this information and how can you use it to the benefit of your trading performance?
First of all, you need to work out just what your individual characteristics are and what your personality profile is, so you can start ironing everything out to give your trading a boost.
Luckily, a lot of the hard work has been done for you by Dr Van Tharp, a professional psychologist and trader coach who has written a vast amount of literature on trading psychology and personality… so you can bet that he knows what he’s talking about!
Dr Tharp has identified 15 different trader personality types:
- The Accurate Trader
- The Administrative Trader
- The Artistic Trader
- The Adventurous Trader
- The Detailed Trader
- The Facilitative Trader
- The Fun Loving Trader
- The Independent Trader
- The Innovative Trader
- The Planning Trader
- The Socially Responsible Trader
- The Spontaneous Trader
- The Strategic Trader
- The Supportive Trader
- The Values Driven Trader
And if you want to find out where you sit among these 15, you can do so very easily indeed by heading over to the Van Tharp Institute website where there’s a handy little personality test you can take.
We’ve been doing a series of posts on the blog that have been delving a little deeper into each of the personality profiles so you can see where you fit in and what changes you could make (if any!) to how you trade based on what you learn about yourself.
In truth, you’ll probably find that you identify characteristics within yourself from several if not more of these profiles, but there’s no need to worry if you do have something of an overlap. It’s simply a matter of finding out what’s most applicable to you so you can analyse your trading on a deeper psychological level and change your strategy as appropriate.
In this blog, the last in the series we’ve been running, we’ll be looking at the Strategic Trader, the Supportive Trader and the Values Driven Trader. Where do you think you’ll position yourself?
Now, if you’ve identified yourself as being a Strategic Trader, then you’re already in an incredibly strong position and definitely have what it takes on an intrinsic level to make a career out of trading.
Strategic Traders have all three of the core qualities Dr Tharp has identified among the top traders out there, so you already have all you need to really excel at fx trading… as long as you’re willing to put the work in, of course.
As a Strategic Trader, you’re able to see the bigger picture and make new connections between events to identify new possibilities and opportunities quickly and relatively easily.
You’re also able to make your decisions based on logic and analysis, which will certainly prove very useful from a trading point of view. And you’re decisive in general, orderly and able to tackle tasks sequentially, all of which can really help you on the trading floor.
Advice from Dr Tharp is to consider really studying some of the most successful traders out there and seeing what they do in different situations. This can help you see patterns in the market so you can work out what you need to do in order to take advantage… you may well find yourself joining the ranks of the greats sooner rather than later as well!
Another key trading skill that you’re likely to have in abundance is a really strong sense of independence and self-sufficiency. This is an essential quality for traders, so if this sounds like you, you really are in a strong position.
However, there are some challenges you need to be aware of that could get in the way of your success. For example, you may be such a logical person that you fail to see when your emotions are leading you astray.
You also have a tendency to be a perfectionist and this could see you stall as a trader, so busy developing better systems and strategies that you actually neglect to trade at all… so be aware of this pitfall if you can.
Unfortunately, if you’ve taken the personality test and your results suggest that you’re a Supportive Trader, you don’t have any of the three core qualities that help to really drive trading success.
But that doesn’t mean you won’t be able to bring home some big wins! It might just mean you have to try a little harder at it than others and, in this instance, knowing your strengths and weaknesses as a trader becomes even more important.
Supportive Traders are typically very dependable, practical and realistic, taking their responsibilities extremely seriously indeed. They’re also reluctant to take risks, which can prove problematic for trading strategies, as it may be necessary to take some quite significant risks when trading if you do want to make a lucrative career out of it.
Another area where you may fall down on as a Supportive Trader is your values and view of how life should be.
When something doesn’t fit in with your world view, you’re certainly vocal about it but you often find that you adapt your beliefs and outlook to fit in with someone else’s standards of what’s right and wrong, instead of trusting your own values and believing in yourself.
For trading, this could have some disastrous consequences… so if you’re determined to make it as a trader, this could be a great area to really prioritise first of all.
You do have some trading strengths, however, so with some work you may well see the success you’ve always dreamed of. For example, you can identify patterns and opportunities quickly that you’re able to hypothesise quickly to bring forth low-risk trading ideas.
And you can work well with simple systems and ways of working that put risk management at their core, so if you’re just starting out as a trader, this could be a good strategy for you to employ.
Here’s the good news! If you’ve worked out that you’re more of a Values Driven Trader than anything else, you’re already blessed with two out of the three top core qualities that make a successful trader! You’re able to see the big picture easily and you have no problem whatsoever making decisions, both of which will really help you in your trading career.
Typically, these kinds of traders trust their instincts above anything else and this can be a really advantageous trait to have as a trader. However, training and practice is essential if you are to turn this attribute to your real trading advantage, as it could lead you astray if you don’t have significant market experience.
Values Driven Traders are also often found to be creative and independent, which are also great skills to have for forex trading. You’re likely to have lots of great ideas for your planning and strategy, so if you are able to fully commit and put the hard graft in, there’s absolutely no reason why you shouldn’t perform well as a trader.
Something to really focus on is the analysis involved in trading. Without this, it’s probable that you won’t see the success you want, since you’ll be largely driven by your own instincts and gut feelings, rather than what the data says. So make sure you keep an eye out for this particular pitfall!
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