Your Trader Personality Type
One's Trader Type is a set of character traits that do not change much over time. Like DNA, character traits influence how we live.... and how we trade. Your Trader Type is also associated with a specific set of strengths and weaknesses. You may already be aware of these positive and negative factors in your trading, but you may not have realized that they correspond to a Type.
This means that there are thousands of traders out there with the same or similar profile, facing the same issues that you are. Additionally, your trading buddies and mentors are likely to be of a different type. What works for them is probably not going to work for you. Once you realize this, you can approach your own development as a trader with more clarity and focus.
My Trader Type model is based on five distinct personality types: Agrarian, Warrior, Artist, Realist and Engineer. The acronym is AWARE™-. Most traders express the characteristics of just one type, but hybrids of two types are not uncommon. As traders develop, however, some individuals begin to integrate more than two approaches, resulting in what I call 'Super-Hybrid' combinations of 3 or more types.
Congratulations! Super-Hybrid test results tend to be associated with advanced traders and your results place you in this category. Super-Hybrid traders tend to be the most successful because they are the most adaptive. Of course, this process takes time. Like a good wine, Super-Hybrid traders have matured 'organically' in order to achieve mastery over the complex market environment.
Agrarian ('Farmer') + Artist + Realist (A Super-Hybrid)
Based on your answers, your Trader Type is Super-Hybrid of at least three of the five standard types. Your most dominant types are: 'The Agrarian' (aka 'The Farmer'), The Artist and The Realist. Below you will find a separate discussion of each type. The way you integrate the three dominant styles will be somewhat individual. That said, once you are aware of the mix, you may recognize how they each express themselves in your trading. You will trade the best when there is harmonious inner cooperation.
Type 1: THE AGRARIAN (aka 'FARMER')
- Deliberate and methodical planner
- Largely unemotional
- Honest and helpful
- Oversimplifies trading
- Flustered by volatile or random markets
- Takes trading results personally
- Too nice
The term, however, might need some clarification. Remember those Hollywood Westerns where mom and pop Farmer, (who might also have some sheep) were pitted against the marauding nomadic cowboys or Indians? This theme generated endless dramatic interest because the two cultures are polar opposites. Whereas horsemen are aggressive, Agrarians have a generally cooperative, albeit vigilant attitude and circle the wagons when challenged.
Unlike the opportunistic raiders, Agrarians are careful planners. For Agrarian Traders, consistency is much more important than spontaneity or creativity. Agrarians take calculated risks, but they don't change horses in mid-stream. Rather, Agrarian Traders want a clear, reliable method that they can apply repeatedly to just one or two markets. This might mean you are attracted to automated strategies.
Agrarian Traders don't chase momentum, but rather prefer to take advantage of the repeating patterns and cycles in their chosen market. Agrarians also tend to take a longer- term perspective than other types of traders, which means you are more suited for swing trading than daytrading.
Agrarian-type traders are naturally attuned to market 'weather' and will tend to look at market internals or other measures for a read on conditions. Agrarians will be reluctant to make trading decisions without referencing the character of the environment and attempting to harmonize with it. Along that line, Agrarians are not counter-trend traders; you want to go with the flow.
Agrarians are straightforward individuals who may underestimate the difficulty of trading and may not be prepared for its random acts of unkindness. Agrarians believe hard work has just rewards. Because they value fairness, Agrarian Traders risk taking the randomness of the market personally when it causes them to lose money. This can lead to feelings of rejection and depression.
Type 3: THE ARTIST
At the same time, there is a part of you that approaches the market like an Artist. This Trader Personality Type has the following strengths and weaknesses, summarized here and then discussed below.
- Highly creative and intuitive
- Ability to adapt to changing conditions
- Synthetic thinkers
- Excellent at pattern recognition
- Market psychologists
- Difficulty planning and following rules
- Overly engaged with the market
- Too emotional; Low tolerance for stress and losses
- Poor sense of timing
- Fear of missing out
- Over-reliance on mind-reading (missing the obvious)
Artist Traders are fascinated by the market because the complex, ever-changing panoply stimulates them, both intellectually and emotionally. Artist Traders are excellent students of the market and work hard to understand the intricacies of its behavior and motivation. They are particularly skilled at identifying patterns. They are also highly intuitive individuals, who often seem to be able to sense what is going to happen next.
In contrast to the pragmatists, Artists are possibility people, which means they are never satisfied. They constantly explore (and collect) new trading ideas, systems, methods and/or indicators. Often, an Artist Trader will have a goal to create a hybrid system consisting of elements gleaned from their explorations and experiments... a grand synthesis. Indeed, in their unending quest for knowledge and mastery, Artists often feel like they are "on the verge of greatness."
For Artists, however, trading rules are always provisional. It is less important for them to follow their rules than to achieve a sense of attunement with the market in the here and now. The market is always changing and Artist Traders want to go with the flow.
Artist Traders often know where the market is headed, but it can be difficult for them to actually capitalize on their foresight. Artist Traders have a tendency to mind- read the market rather than trade what they see. This can result in missing the obvious.
When they take action, it can be early or ate because their thinking process is largely non-linear. As a result, Artist Traders tend to be driven by the fear of missing out.
Artist Traders over-rely on creativity, which can lead them to constantly change their trading system. Consequently, they will often find themselves using a system they have not yet mastered. Opportunities, therefore, will slip through their fingers.
In an effort to understand the market better, Artist Traders tend to get over involved with the micro-movements and nuances of price action. This can tire them out and stress them out. Unfortunately, their stress tolerance is usually low and their emotionality is high. That can be a dangerous combination.
Type 4: THE REALIST
Based on your answers to the Personality Type questions, your Trader Type is THE REALIST. This type has the following strengths and weaknesses, summarized here and then discussed below.
- Practical and pragmatic
- Willing to do whatever it takes to succeed
- Take losses personally
- Don't seek help soon enough
- Secretly self-critical
- Fear of finishing the race in second place
Realist approach trading in a practical manner with a focus on what works. All traders have to be realists to some extent, but Realists with a capital 'R' are the true pragmatists of trading. Realist Traders could be comfortable trading a 'black box' system, as long as it produced results. For Realists, winning is what matters and they will be disappointed in themselves if they don't win everyday.
If a Realist comes to trading after a previous career, he/she will usually have been quite successful at it. They are confident they can make it as a trader because they have tasted success and their chameleon-like nature enables them to adapt. In fact, their high level of confidence often inspires others.
Although Realists find it easy to make friends and close deals, they also tend to be somewhat sensitive to how they are perceived by others. Although they have a very competitive and ambitious nature, Realist Traders are careful to not to appear arrogant. Nevertheless, Realists approach the market in a mercenary manner and will take advantage whenever and wherever they can.
One of the things that attracts Realists to trading is the fact that their success only depends on themselves. Realist Traders work on maintaining a positive, winning attitude at all times. They hate to fail, but they are also capable of taking failure in stride because they are confident they can bounce back.
Realist Traders might seek to emulate certain qualities of famous traders and they certainly aspire to that lifestyle. In their trading, Realists prepare to scale up in size as they learn the ropes. Realists also know how to have a good time and leave the office at the office. This means they can strike a healthy balance between work and pleasure.
Underneath their grounded realism is an imperative to win that can make it difficult to tolerate losses, which are a normal part of trading. The risk for Realists is that they will hide or deny their actual trading results if they are not up to par and wait too long to seek help if they are having problems.
Realists also have an emotionally vulnerable and self-critical side that they often hide. Because they are so focused on success, Realist Traders can also get ahead of themselves, which may create a troubling discrepancy between the golden future and the less-than-ideal present that can occasionally destabilize them.