WHAT’S YOUR TRADER PERSONALITY TYPE?
What’s Your Trader Personality Type?
A certain level of self-awareness is absolutely vital for any trader worth their salt and if you want to enjoy a lucrative career trading currency pairs, then it would perhaps be advisable to turn the lens inwards from time to time, focusing on yourself, your personality, your attributes and your characteristics… all of which can help you improve as a trader – and as a person.
It can be a cutthroat world and not everyone is suited to life as a trader but, that being said, there are lots of lessons to be learned along the way so even if you’re not quite cutting the mustard at first, there’s absolutely no reason why you can’t evolve and become the trader you always knew you could be.
In terms of personality types and trading psychology profiles, it seems that there are 15 different general trader types that people typically fall into and understanding where you sit in this regard could prove particularly useful if you are trying to up your trading game but don’t know where to begin.
These profiles were devised by Dr Van Tharp, a professional psychologist and trader coach who has written many books on the subject… which could be useful research and reading material if you’re keen to grow and evolve as a trader.
If you head to the Van Tharp Institute website, there’s a test you can take that will help you determine what your trading personality is. Arming yourself with this knowledge could help you in the future, allowing you to uncover more of your strengths and work out how best to go about addressing the challenges you’ll come across that could affect trading profitability.
The 15 different trader personality types are:
- 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
Over the next few blog posts, we’ll be drilling down into each of these psychological profiles to help you find out more about each one and to see where you fit.
It’s likely that there will be overlap between the different profiles, but it could be useful to find out which one is most applicable to you so you can see if there are any changes you could make to your trading strategy to give your career a bit of a boost.
There are some desirable traits that Dr Tharp did identify among all of the very best traders he worked with, which could also prove helpful where your evolution as a trader is concerned.
Working on your ability to look at the bigger picture and identify trading opportunities, using analysis and logic when forming trading decisions and being organised and decisive can all really help your performance, it would seem.
Unfortunately, there are only two identified trader personality types that have all these characteristics: the Strategic and the Planning Trader. So if you don’t fit into these categories, you may have to put some hard graft in so you can see the successes you’ve always dreamed about.
To help you work out where you sit among these psychological profiles, here are the first three in more depth.
The Accurate Trader
As the name might suggest, the Accurate Trader is someone who is incredibly detail-oriented, keeping in-depth records of everything related to their trading so they can conduct highly focused analysis to aid decision-making and filter good opportunities.
This is an incredibly useful trait to have for anyone interested in FX trading and prioritising accuracy and putting data analysis at the heart of everything you do will certainly stand you in excellent stead as a trader.
In fact, as an Accurate Trader you already have one of the three core qualities that top traders seem to possess – the ability to work sequentially, decisively and in an orderly fashion. So that’s a great place to start!
This personality type is generally very responsible and reliable in all areas of their life, knowing what needs to be done and how to go about doing it in order to achieve success.
However, if this sounds like you, one trap to be aware of is focusing so hard on your analysis and data that you forget to make time to actually trade. Remember to strike a balance and put all your hard work into practice. Otherwise, those wins will remain out of reach!
Looking at the bigger picture can be difficult if you’re an Accurate Trader and devoted to zeroing in on the finer details, so make sure that you take a step back and review the market as a whole from time to time, as well.
If you’re just starting out as a trader and you feel as though you sit within this psychological profile, advice from Dr Tharp is to consider learning from a mentor so you can see how to do it and gain experience through practical applications.
The Administrative Trader
Do you consider yourself to be a highly rational and practical person? Are you able to make strong, firm decisions as and when the need arises? If so, it could well be that you fit into the Administrative Trader personality type.
When FX trading, it’s essential that you’re able to keep your cool and follow your trading strategy to the letter when faced with potentially volatile or difficult situations and Administrative Trader types are very good at doing this.
The market is unpredictable and prone to fluctuations, so being able to ride the wave and keep panic at bay is an excellent trait to foster if you can, allowing you to make good decisions quickly. If you’ve already got this skill, great! You’re well on your way to seeing trading success.
Administrative Traders make naturally good leaders, so if you are in a position of responsibility elsewhere in your life, you may well find that you fit into this personality type.
Do you strive to ensure that everything runs smoothly and productively? Do you consider yourself to be highly organised and efficient? If so, it’s possible that this is where you fit in.
As an Administrative Trader, you will already have two of the top three core qualities typically seen in great traders – doing things sequentially and in a decisive and orderly way, and making decisions based on logic and analysis.
One top tip from Dr Tharp to help those who position themselves here is to ensure that you follow the right guidelines or advice. Because you love the details of trading system analysis and development so much, you can easily be led astray if you’re not careful.
You may also find that you’re overly critical and only pay attention to the negatives in your trading. Recognising your mistakes will be key so you can learn from them and ensure you progress as a trader.
Stress can also be problematic for Administrative Traders and, if things start to go wrong, you often find yourself simply working harder… which can increase your stress levels and this, in turn, will have a big impact on your trading and the decisions you make.
The Artistic Trader
If you’ve been identified as an Artistic Trader, it’s not all good news.
Unfortunately, your particular psychological profile isn’t particularly well suited to the world of forex trading – and Dr Tharp even goes so far as to suggest that you find a trustworthy money manager to handle your account if you discover that the trading work you have to put in doesn’t align with what you really want to create.
The characteristics you do have that are beneficial from a trading perspective include your ability to be open minded, adaptable and flexible when you trade. You may also find that you’re effective at identifying patterns and spotting the early signs of changes in the market, which will certainly help you see success.
However, you may not be as adept at finding and fixing your mistakes and you may find yourself being increasingly led by your emotions, which can spell disaster if you’re not careful.
Your need for excitement may also have a negative impact on your trading performance and Dr Tharp suggests that you find other ways to fulfil this need, such as poker. As he observes, good trading is boring and it requires you to follow rules and repetitive processes, with daily preparation a must… which may not appeal to you as an Artistic Trader.
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