There is a stereotype of what traders are like, or supposed to be like. The image is mainly due to profiles of traders on business news channels as well as how they are depicted in Hollywood movies. Traders are often portrayed as sociopathic reptilian creatures with bad tempers whom talk fast, and trade even faster.
Indeed, some traders fit the mold, complete with the requisite psychological or pathological traits. The majority however, don’t fit any particular mold. Traders may share some traits-as the process of trading can itself mold personalities-but each individual brings a unique perspective to game. The common thread amongst all successful traders, is that they have what it takes to win, and when they don’t, they do anything to get it.
There are as many different personality types among those trading forex, as there are minutes in a day.
Here are a few of the more recognizable ones:
Type “A” Personalities Review
You’ve seen these people. American real estate mogul Donald Trump comes to mind. They cannot sit still. They are always in motion, doing, commanding, pushing. They can be perfectionists by nature, unable to delegate even the smallest tasks. The Type A tag is generally used to denote an assertive go getter whom does not take NO for an answer. They are thought of as being on the fast track for a heart attack, but the reality is that their health is often better than average when their aggressiveness and attendant stress finds an outlet. As traders, they can be very quick on the uptake, decisive and able to take advantage of opportunities where others might stall or hesitate. The trader Paul Tudor Jones is a good example. He has managed to turn Type “A” into billions of dollars.
Big Picture & Small Picture Trader
There is a direct correlation on how we view things, and our basic personalities. Some traders are very good at seeing macro conditions clearly, while others are more in tune with the moment. Fundamental analysts are “big picture” types, which can seem subjective to technical analysts whom are often oblivious to the overall frame.
Street smart and high emotional IQ types
These are the astute readers of other people and situations. These types can look at charts as well as price action, and intuitively understand how to translate what they see into profitable trades. They tend to have good memories for trading history and patterns, and able to bring forth this knowledge as traders.
Super Analysts and Quants Traders
Geeks, mathematicians, programmers, robot designers. Whatever the moniker-or training and education-these are the types that analyze...and then analyze some more. Indeed, they never stop analyzing. They operate with the core principle that everything can be explained, categorized and quantified to come up with the likeliest logical outcomes. As traders, they are detail oriented and will dig deeper than others to understand markets. They backtest ferociously. Their strategies are generally more complex and articulated than those of the street smart trader whom is viewed as flying by the seat of his pants. The Achilles Heel of the hyper analysts is that they can succumb to paralysis through too much analysis.
Calm FX Professionals
This is what all traders, regardless of their inherent personality type, aspire to. The ability to trade without emotion, yet with the ability to read the “emotion” of the market and make rational choices.
The Gambler or Forex Risk Taker
Markets and brokers love these traders. They throw caution to the wind, and stretch money management to the furthest boundaries. These are traders with adventurous personalities which can manifest itself in their choice of trading method, such as scalping and day trading. On the plus side, this type of personality can also exhibit a high degree of innovativeness and flexibility.
Similar to the risk taker or gambler, this trader can have unrealistic expectations of the market, as well as of their own ability to navigate and successfully trade. Setbacks and losses can be especially devastating to this personality type, and they often require a great degree of mentoring and outside encouragement to break through their emotional cloud.
Currencies have personalities too
Each currency-as well as every currency pair-have their own unique set of characteristics and “personalities.” Indeed, some pairs can react in an almost emotional manner to market stimuli. The slightest rumor can trigger a selloff or breakout. Many traders will match their own personalities to the currencies they are trading. For example, more active traders might stay clear of those pairs with short Average True Ranges or tighter spreads.
Human nature is complex and most traders fall into one or more categories. Although we are born with certain personalities to a great degree, our environment shapes us as well. Traders whom don’t possess the traits associated with successful trading can acquire them through time, application, and experience. Trading is not rocket science. Indeed, it is not science at all. It is more akin to art. While natural talent is helpful, it is not key to trading success. Having the ability and the desire to learn are more critical.