What are the personality traits of successful Forex traders?
How personality traits effect trader performance has been a longstanding discussion point within the trading community, since the birth of the industry. Moreover, because certain personality traits can evolve and develop as we mature, the traits we require in order to become successful traders may require attention and modification as we recognize their impact during our ever changing personal development as a trader. Certain traits we’ve developed, or acquired in our previous life and career, may also prove to be incompatible with retail trading as a career.
It’s worth noting that many major banking institutions subject their candidates to psychometric analysis tests before appointing them to work in their trading departments. These personality tests will determine candidates’ suitability to work in the environment and industry, the tests are often relied upon and rank equally with, the high level qualifications necessary for the role.
Similar to major banks, a useful self-test, in order to begin identifying you personality traits and overall suitability for trading, would be determining your personality type. Psychologists suggest there are five major factors which determine different personality types:
- Openness; the ability to appreciate and welcome a variety of experience.
- Conscientiousness; the ability to plan ahead, as opposed to spontaneity.
- Extraversion; being out-going, social, energetic.
- Agreeableness; quite simply being agreeable.
- Neuroticism; a reference to being a worrier, being vulnerable, or considering yourself to be vulnerable.
Immediately we can highlight which factor would be considered negative, in terms of our trading performance. We’d immediately isolate neuroticism as a negative factor; worrying about each trade we take and feeling vulnerable during each trade, would severely hinder our trading performance. However, if you’re a combination of: open, conscientious, extrovert and agreeable, you’d begin to consider yourself as having a good foundation and base from which to trade, with the obvious caveat that extraversion mustn’t overlap with impulsive behaviour.
Similar to defining your personality type, personality traits, in relation to a person’s emotional structure, can be classified into two distinct areas; negative and positive traits. Naturally, the positive traits are more likely to have a positive effect on your overall emotional foundation, allowing you to potentially trade successfully. Personality traits are usually categorized into the three following groups:
- Our actions
- Our attitudes
- Our behaviours
A brief list of positive traits, which would be beneficial to traders, would possibly include:
Disciplined
Adventurous
Conscientious
Dependable
Observant
Impartial
Independent
Optimistic
Intelligent
Persistent
Capable
Precise
Confident
Dutiful
Reliable
Imaginative
Meticulous
Humble
A brief list of negative traits, which could be a hinderance to traders, would possibly include:
Laziness
Pompous
Dishonesty
Arrogant
Impulsive
Slovenly
Self-centred
Unruly
Thoughtless
Conceited
Obnoxious
It’s a fairly obvious conclusion to suggest that we need to apply some introspection to determine which plus and minus columns our individual traits fit into, after we’ve identified our personality type. Thereafter, we can work on our negative traits to either eradicate them, or keep them under lock and key, to ensure they don’t negatively impact on our trading. Moreover, we can then concentrate on both our plus and minus columns, in order to begin the construction of our trading plan.
During this brief period of introspection we may begin to question other aspects of our trading; why do we trade, what are we looking to achieve, is money our primary goal, are we looking for personal freedom from the nine to five, do we have the necessary capital and skills to make a success of this new career path and do we have sufficient numbers in the plus column, in order to be confident that we can ultimately win in an arena that only a small percentage of ‘players’ actually succeed?
What is an undeniable fact is that many of the positive traits previously listed will aid traders. For example, being: disciplined, curious, meticulous, observant, honest (with ourselves), confident, optimistic and persistent are absolute necessities, without these traits, or a vision as to how you’ll develop them, it’s unlikely you’ll ever succeed in an industry with such a high attrition rate. Similarly the last trait on our list, being humble; realising that not only can the market regularly humble you, but that you should never ever consider yourself to be an expert, should be a trait permanently at the forefront of traders’ thinking.
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