Trading Personality Quiz Copy

TRADING QUIZ – Trading approaches that suit you

Qs 1, 4, 7, 10, 13 assess DILIGENCE in a personality

MOSTLY ‘A’s

A diligent person who is good at
> following rules
> trading mechanical systems Ideally, you want
> a style of trading that is more structured and detail-oriented
> very active trading with rigid loss cont

MOSTLY ‘B’s

Traders who are less diligent will
> have difficulty following explicit rules and often trade more discretionarily
> be frustrated trading in a highly structured manner Such a trader would do better with
> big picture trades that do not require detailed rules and analysis
> less frequent trades and wider risk parameters

Qs 2, 5, 8, 11, 14 assess the EMOTIONAL aspect of a personality

MOSTLY ‘A’s
The trader prone to emotional upheaval experiences
> wins resulting in overconfidence
> losses resulting in fear and hesitation Such a trader may do better by
> using their sensitivity to obtain an intuitive for market action
> avoiding very active trading methods

MOSTLY ‘B’s
The trader who is less emotional is more likely to
> approach trading problems with problem solving and analysis
> not take wins or losses particularly personally This trader may
> be closed off to subtle, intuitive cues when a trade starts to go against them
> is less likely to tie trading failures to selfesteem

Qs 3, 6, 9, 12, 15 assess a trader’s RISK AVERSION

MOSTLY ‘A’s
A risk-averse trader is one who
> cannot tolerate the possibility of large losses
> often experiences difficulty hanging onto winning trades and will cut profits short to avoid reversals
> finds volatility and trading too large, overwhelming and disturbing
> trades with careful stops and money management
> trades smaller time-frames where risk can be controlled with the holding period
> prefers smaller frequent wins with controlled losses to larger wins with greater drawdowns most

MOSTLY ‘B’s
The risk-seeking trader
> likes stimulation and challenge
> tolerates larger positions and longer holding periods
> can be impulsive in entering trades
> have difficulty trading during periods of low volatility
> finds trading too small boring and will lose focus

DILIGENCE EMOTIONAL ASPECT RISK AVERSION

It is the blending of these three dimensions of trader personality and not any one in isolation that is most important in shaping trading outcomes.
The combination personality most poorly suited to trading are those that are less diligent, risk seeking and highly emotional.
These traders are likely to take impulsive gambles driven by emotional frustrations.
An example would be a trader who gets frustrated after a loss and doubles his position size on the next trade just to make the money back quickly.

SUMMARY

Remove any emotional trading decisions Learn discipline, that is stick to your trading plan and your risk management plan
Praise yourself if you execute your trading plan accurately no matter if the trade produced profit or loss
Observe your own thoughts while you are making trading decisions
Don’t base trading decisions on ego, anger, fear or greed
A calm state of mind is your friend
Use mind relaxation and trading technique commentaries to prepare yourself for difficult situations and too-early profit taking
Underline your personal rules and discipline with a guided commentary
Do your research and base your moves on logic but be open to intuition
Look for crowd psychology situations and take advantage of them
Work out your personality, then work out your style of trading
Your style must come from yourself and not others
You need to create your own rules, you must understand why they are there
Use contingent orders to help with discipline

READING LIST

Mihaly Csikszentmihaly
“Psychology” (non trading)
Mark Douglass
“The Disciplined Trader” and “Trading in the Zone”
Eva Diaz
“Real Traders, Real Lives, Real Money