Trader Personality Types: Discover Your Trading Style
March 23, 2021
The concept of personality types refers to cognitive psychology, a discipline that has recently gained prominence among the general public. This theory, and more generally, the possibility of dividing personalities into "types" can also be applied to trading. In fact, to traders.
Essentially, there are personality types of traders, ideal typical classifications that group all traders, each with its own specificity and attitudes. Knowing them means knowing yourself. Incidentally, self-knowledge allows you to improve, to go beyond your limits and fix your mistakes.
Hence, the need for an article on the psychological types of traders, listing and describing them. An article like the one that follows.
Psychological sphere and trading
Before describing the psychological types, it is important to dwell on a fundamental question: the relationship between psychology and trading, or rather between the psychological sphere and trading.
The truth, to be honest not too pleasant, is that the psychological sphere of the trader impacts dramatically on their activity. In a sense, especially if managed in an inappropriate way, it orients it.
The reason? Firstly, because the psychological sphere affects behaviors always and in any case, regardless of what one does. Secondly, because it is somehow activated by particular dynamics, typical but not exclusive to trading. These dynamics have to do with the pressure that trading activity exerts on the individual, who has to come to terms with the risk of losing money on each trade.
The psychological sphere impacts, it's true, but it doesn't mean that it cannot be managed, so that its influence, which is irremovable, does not cause negative consequences on the trader's hopes of success.
The first step in managing the psychological sphere, and in particular the wide range of actions that proceed from it, is precisely to acquire full awareness of oneself and one's attitudes.
Personality types
The reasoning on the personality types of traders arises precisely with the intent of offering practical tools to understand oneself.
So, here is an exhaustive list of the main psychological types.
The analytical trader
This is the trader who bases their work on analysis. They are also a trader capable of gathering a large amount of data and interpreting it. They reserve little space for instinct, in fact they are characterized by a marked prudence.
The decisive trader
This is the trader who finds themselves relatively at ease during the storm. They are characterized by a strong propensity for decisions, and move fluidly in the market, always actively seeking some opportunity. They react quickly to the unexpected, even at the cost of taking some risks.
The creative trader
This is a type of trader who loves to experiment, but who not infrequently traces their own path. They love to personalize strategies, both to make them consistent and functional to their needs, and to identify innovative approaches to trading activity. However, they maintain a marked propensity for analysis, necessary to "survive" despite the tendency to change.
The adventurous trader
This is the trader who bases their activity on courage, on the will to exploit the widest possible spectrum of opportunities. Generally, this type of trader correlates to greater risk exposure, so it is not uncommon for them to incur heavy losses. To avoid this, they precociously mature a remarkable technical background, which allows them to compensate with skills for the chronic lack of stability.
The maniacal trader
In a sense, it is the evolution of the analytical trader. Like the latter, they love analysis. However, they also love details. They are an extremely prudent trader, who moves only when all the data suggests doing so. Their main flaw is slowness, which is physiological to their way of acting but at the same time limiting. They prefer, therefore, long-term approaches.
The facilitator trader
This is a balanced trader, who doses energies, who gives the right space to both analysis and operation. They find themselves at ease when they are part of a community, an eventuality that is far from rare in times of social trading. They love sharing ideas and discussing the best strategies. Not infrequently, they are part of a group of traders, an experience they find more enticing than trading alone.
The mentalist trader
They are characterized by the importance given to the psychological element. More than numbers, which they still manage in a sufficiently accurate way (just enough to be able to operate), they look at the dynamics underlying the behavior of traders. For them, the trend is above all an expression of collective behavior. Unlike many, they find themselves at ease in the most turbulent periods, as they are used to finding the common thread, the key to understanding even the most dramatic of panic selling and the steepest of rallies.
The good trader
Each personality type has its strengths and weaknesses. Good traders and bad traders are found in all categories. Also because the characteristics that distinguish the good trader are transversal, and there aren't even that many. In fact, we could say that there are.... Only three (if we stick to the main ones).
Overall vision. To be able to operate successfully, a trader must be able to grasp the overall picture. Only in this way will they be able to understand the current price trend and hope to sense future movements. Otherwise, they suffer the market, rather than exploiting its dynamics to their advantage.
Propensity for analysis. A trader may be creative, but to even hope to earn, they are literally forced to practice good analysis. It follows that the good trader is an expert in the art of analysis, primarily technical but also fundamental.
Determination. Trading is a complex activity, the market is an extremely competitive environment. Uncertainty often reigns, exacerbated by the risk of losing one's money, which is always present. It takes guts, a certain ability to withstand stress and pursue one's goals. Winning traders, therefore, are determined, as well as endowed with a certain strength of mind.
