PERSONALITY PROFILE QUESTIONAIRE OVERVIEW
The personality profile questionnaire utilizes the NEO Five Factor Inventory derived from the research of Robert McCrae and Paul Costa. This assesses personality on five trait dimensions that have been found to be relatively stable across the lifespan:
1. Neuroticism – the tendency toward negative emotions.
2. Extraversion – an outward orientation toward people and life.
3. Openness to experience – a desire for novelty, variety and risk taking.
4. Agreeableness – the tendency to get along well with others.
5. Conscientiousness – the capacity to be reliable, steady and trustworthy.
- From our findings the traders who reported the greatest success tended to score high in conscientiousness. There were very steady and reliable.
- The traders who reported the greatest problems with their trading tended to score high in neuroticism and openness. They were experiencing many negative emotions and tended to use trading for excitement.
- The conscientious traders tended to be highly rule-governed in their trading. There was little excitement in their trading. Instead, they very consistently developed their plans and followed them.
- The neurotic and risk-taking traders tended to make their decisions impulsively, without prior planning. They tended to revel in telling stories of their great wins and losses.
The key to the study is that success in trading is related to the ability to stay consistent and plan-driven. Traders fail not because of their emotions, but because their emotions deflect them from their purpose. In developing their rules and systems, the successful traders had found a way to immunize themselves from the emotional effects of market volatility. Indeed, in many respects, the successful traders appeared to be every bit as fearful as the unsuccessful ones. It’s just that the fears of the successful traders were not those of drawdown or missing a market move. Rather, they feared deviation from their plans. Dedication to purpose was the cornerstone of their success.
Development Path to Success
The following are some thoughts on developing a path to success:
1. There is no quick or easy way to success. Success in trading comes from years of hard work and dedication.
2. Develop strict money management rules. Execute your money management rules instinctively and without hesitation. Never change these rules when trading, unless it is in the more conservative direction. Remember, anything can happen in the markets at any time. Always stay defensive and preserve your trading capital.
3. Top traders know human psychology better than they know technical analysis. They are also aware of their own psychological profile, and are able to profit from this knowledge. Many experienced traders have stated that they wished that they had spent more time learning psychology of the markets rather than technical analysis.
4. Top traders are humble, and spend a lot of time studying markets because they enjoy it.
5. Top traders treat a trading loss as a learning experience rather than a failure. Top traders never quit after a trading loss. They are always ready to trade again with new market knowledge.
6. Start a trading career the same way that you would start a business, because trading is a business.
7. Develop your “OWN’ trading plan. A trading plan that works for one trader, will not work for another. Each one of us is unique, and only you know what your trading plan should be. This ability shows dedication to your trading career and discipline.
8. Constantly refine your trading plan. The markets are constantly changing. What works today will not necessarily work tomorrow. Successful traders stay constantly in-tune with current market activity and themselves. Each day is a unique market experience.
9. Watch the markets you trade every day and how they behave in different market states. Top traders spend years learning their markets so well that they can instinctively anticipate a change in market direction and profit from that activity. However, do maintain balance with some off time and quality of life considerations.
10. Use market state and structure as a tool to support your instinctive anticipation of a market movement. Systems that only use technical indicators as strict “buy or sell” signals are rarely consistently profitable and must be optimized.
In summary, to be a successful trader requires that you treat trading as a business and a job that you enjoy above all other jobs. It takes years of hard work and dedication. There is no short cut path to success.
Click here to get started by taking a Personality Profile.