This week’s traders personality quiz is a bit of fun, but there’s an underlying message here – that we all have these traits.
We don’t need to change who we are to be good traders, but we do need to bring some of these characteristics under control, find trading methods to help us and adapt our trading to best suit our personalities.
So, answer these 12 questions honestly, and see where you fit in …
Mainly As: Wow, you’re disciplined. So much so, that I wonder if you’re really telling the truth here?! But the frustrating truth about trading is that the most successful traders are the no-nonsense systems-guys like you. Successful trading isn’t about taking risks or flying by the seat of your pants. It’s a lot more dull than that. And you, my friend, have the skills! However, be aware that if you’re too risk averse, you may find it hard to hold onto winners, cutting them short rather than letting them run. And you may struggle to manage a trade that’s showing a loss.
Mainly Bs: I think you got the wrong idea about trading – it’s not the high-risk activity that’s it’s made out to be by Hollywood movies about Wall St. If you take big risks in the market, you might get lucky and have some winners … but ultimately, you’ll lose. Carefully monitor your position size – if it’s too small, your risk-seeking nature will quickly become bored; if it’s too large – you’ll soon be blown out of the game. Look at hedging strategies that will allow you to add protection to your trading in an active way, that will suit your need to be ‘doing something’.
Mainly Cs: You let your emotions govern your behavior too much. Negative self-talk will soon stop you making sensible, rational decisions in your trading. Trading can be an emotional roller-coaster, so unless you keep your calm, you’ll end up throwing in the towel after taking a loss. It may feel that the market … your broker … whoever wrote the strategy you’re using … has it in for you, but there are no guarantees in trading, and the market will carry on regardless of what the forecasters say it’ll do. A good trader learns to roll with the punches. By keeping clear trading records, you can monitor your success over the longer term, to avoid focusing on individual losses and winners. As an emotional trader, you may have a strong ‘gut reaction’ to trading – you can try to channel this in a positive way (see this post on how to do this).
Mainly Ds: You need to work on your discipline. None of us are perfect, but if you take this approach to your trading, you’ll never be able to keep together a trading strategy. To build a successful trading system, you need to track what you’re doing, track your results, and evaluate what works, and what doesn’t. You also need to consistently apply your rules, day in , day out. Systematic trading systems, with clear rules, will help you to stay disciplined, but avoid trading strategies that focus too much on the minutiae – you’ll quickly become frustrated as you prefer ‘big picture’ analysis.
Of course, none of us fit neatly into personality categories – we all have areas of our lives where we need to be more risk averse … more disciplined … more positive …
But these questions are more than just a fun game. They highlight the areas of weakness we all have in our trading – being aware of these, and knowing what we need to work on is half the battle won.
We often don’t realize the effect that our negative self-talk is having on our trading … how it halts us from keeping to our disciplined strategies, and makes us ‘flakey’ in our approach.
Or we tell ourselves that we’re just being relaxed, and not ‘over-thinking’, when in fact, we’re trading on whims and not exercising any discipline in our trading.
Most successful traders are a bundle of things – a little too risk-seeking, or too risk-averse … a little neurotic … a little slack in their record keeping … and ultimately very human.
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4 comments
Mark Rose
Hi Tony, I take your point. Like you say, there’s nothing wrong with questioning what you could have done better. I’d also add that getting all As doesn’t make you a perfect trader – you can be too rule-focused, with a carry-on-regardless attitude. I don’t hold with the notion of the perfect ‘robot-like’ trader. Personally, I find my results swing wildly between As and Cs, depending on what side of bed I’ve got out of that day! Not sure what that says about my personality, but there’s clearly work to be done!
Tony
Interesting quiz, but I have a problem with question 10 ” If I take a big loss on a trade….”
Why has the answer ” I’ll question whether there was anything I could have done differently to avoid that loss” been assigned a “D” (ie could do better ) mark, and the answer ” I’ll record it in my trade journal, and prepare for the next trade” count as an “A” (ie excellent ) mark?
Re answer D: What, exactly, is wrong or ill-disciplined about checking to make sure you had’nt, for example, miscalculated an entry point or mis-interpreted a signal? Its not saying I’ll drop the system and try something different, but merely re-checking the validity of the trade. This answer seems to fit exactly with your “Mainly D’s” advice about “track what you’re doing, track your results, and EVALUATE what works, and what doesn’t.”
Re answer A: What is so good about the carry on regardless, despite a big loss, attitude? Obviously the occasional big loss has to be accepted as part of any trading strategy, and should’nt necessarily stop you preparing for the next trade, but surely you have to be aware that market conditions, daily ranges, volatility, world events etc are subject to change and you should therefore not put too much on blind faith in any particular strategy.
All things considered I would have thought that the A and D answers would be better reversed!
Julian
Mostly ‘A’s for me. I must be doing something right then. ?
Darin
Interesting how no one has commented yet!! 🙂 so I’ll go first. Mainly ‘B’s for me….yeah, the ‘need to be doing something’…..