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.
It 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.
Type 5: THE ENGINEER
Based on your answers to the Trader Personality Type questions, your Trader Type is The Engineer. This type has the following strengths and weaknesses, summarized here and then discussed below.
- Deliberate and methodical planner
- Largely unemotional
- Over-reliance on the past
- Flustered by volatile or random markets
- Paralysis of analysis
- Unrealistic expectations
- Fear of being wrong
Engineer Traders tend to be detail oriented and rarely make mistakes. These individuals often have a professional background in engineering, accounting, programming or flying, all of which require a high degree of accuracy. Pilots usually fit into this high-precision category because in flying, mistakes can be fatal.
Engineers are conservative and methodical when it comes to risk-taking, both in trading and in life. They tend to drive the speed limit and fill up their gas tank well before the warning light comes on. They are the one's with a flashlight and other emergency tools in the trunk.
Engineer Traders rely on reason, not on gut feelings, to succeed, which is why they have no interest in gambling. They only take calculated risks and they can give you the numbers: risk/reward and other performance parameters.
When they buy a new device of some sort, they have thoroughly researched it and take the time to read the directions.... before they put it together or turn it on. Engineer Traders play by the rules and ask a lot of questions because they want/need to know the nature of the game before they start.
Spreadsheets are their best friends. They carefully backtest their strategies and methods. Although they are aware that past performance is not always indicative of future results, Engineer Traders would never trade a method that did not have a verifiable track record.
In fact, Engineer Traders are proud of their rationality and secretly enjoy pointing out the sloppy thinking of others. They are in no hurry to make a decision about anything because they see not only both sides of the coin, but also the edge.
Engineer Traders love precision, which is rarely possible in the highly random trading environment. They may require so many factors to line up perfectly that they experience a paralysis of analysis. Engineer Traders also put a lot of credence in backtested results, which may set them up for rude awakenings. When emotions get in the way of their trading, Engineer Traders feel embarrassed. Engineer Traders tend to have a fear of being wrong, which may be accompanied by a critical inner voice. When they do make a mistake, they tend to remember it for a long time.