Trader Personality Defects
- Posted by DynamicHedge
- on October 17th, 2011
I was reading Mark Suster’s website and noticed that he referred to himself as a “ENTP” in several articles. He alluded that knowing his personality type and helps him deal with various situations related to being a VC. Naturally, I wondered, what the heck an ENTP was and why Mark Suster thought it was so important. I googled the term and promptly jumped down the rabbit hole of Myers-Briggs/Jungian personality profiling. Several tests identify my personality as ENTJ. While not identical to the Myers-Briggs, I’ve included the results of what the http://personality-project.org/ test and how each personality trait links to trading style:
Your average score on extraversion was 5.1, which is considered high. It is in approximately the 91st percentile for males between 26 and 39 years old.
Your score on Extraversion is high, indicating you are sociable, outgoing, energetic, and lively. You prefer to be around people much of the time.
This one wasn’t a huge revelation. I’m a pretty social person and I hate trading alone. The ugly truth is that being an introvert is probably more optimal for trading. The danger of being too introverted is obviously that you risk becoming myopic and isolated. Extroverts run the risk of seeking out and relying opinions of others. I know that I have two or three people that I consistently call during the day and bounce ideas off of. I have no idea of why I do this, but I do. I always have to be conscious of making evidence based decisions and not letting the opinions of others cloud my judgement.
Your average score on agreeableness was 4.7, which is considered average. It is in approximately the 68th percentile for males between 26 and 39 years old.
Your level of Agreeableness is average, indicating some concern with others’ Needs, but, generally, unwillingness to sacrifice yourself for others.
Most of the time I’m not a dick to people. By all accounts I’m pretty easygoing and somewhat agreeable in matters of saving face, but very inflexible in matters of principle. When I was younger I had a passion for arguing with people and being generally disagreeable. I’ve made a big effort to pick my battles in recent years and focus on myself rather than wasting my energy on what other people think.
In trading you have to be careful of being too agreeable and becoming subject to market consensus and herd mentality. You also don’t want to be a contrarian for the sake of being a contrarian. This is a delicate art — knowing when to go against the heard or when to go with momentum. There is no single indicator or sentiment survey that can help you with this, just real-time experience and learning how to interpret the data.
Your average score on conscientiousness was 3.4, which is considered low. It is in approximately the 23rd percentile for males between 26 and 39 years old.
Your score on Conscientiousness is low, indicating you like to live for the moment and do what feels good now. Your work tends to be careless and disorganized.
I was quite shocked at this one, but my wife assured me this is accurate. I somewhat disagree with the notion that I live for the moment and do what feels best now. I have a track record of delaying instant gratification for the sake of the bigger picture and long-term payoff. I will say that I have the ability to make snap decisions and I tend to overlook the feelings of others when coming to conclusions. When it comes to disorganization, this is one area that I am vigilant about improving and supplementing through partnership. I’m a big picture guy, but my business and trading partners are all very detail orientated.
Trading is a game where there are winners and losers. There is always someone on the other side of your trade and you can’t be too sensitive to the feelings of other market participants, otherwise you’d never do anything. One area of conscientiousness and empathy that can help in trading is the ability to visualize the thought process of those on the other side of your market view. Where are they likely to feel they are wrong and feel pain in their positions? When will depression or euphoria cloud their judgement and create tradable opportunities? Sounds a bit evil but people do it.
Your average score on emotional stability was 4.7, which is considered high. It is in approximately the 81st percentile for males between 26 and 39 years old.
Your score on Emotional Stability is high indicating that you are exceptionally calm, composed and unflappable. You do not react with intense emotions, even to situations that most people would describe as stressful.
I’ve always been able to take decisive action in stressful situations. I first learned this when I witnessed a family member chop off several fingers in an accident. I cringe when they show surgery on TV, but when the blood was flowing and everyone else was running around like chickens with their heads chopped off I was as cool a cucumber. I barked orders like a drill sargent, directed traffic, located the appendages, notified the authorities, put the digits on ice and drove to the hospital (passing the ambulance along the way).
It’s important to maintain an even keel when things get weird, but keeping calm in the face of danger isn’t everything. Yes keeping calm will help you to think clearly when others are panicked, but the most important thing is to actually know what to do when the situation arrives and act correctly. Some guys who come out the other side of volatility the best are the ones who get a bit animated. They may be flipping out but they know how to gauge their internal barometer and what to do when they feel that way. Keeping calm does you no good unless it’s matched with experience and the ability to take correct action.
Your average score on openness was 5.6, which is considered high. It is in approximately the 86th percentile for males between 26 and 39 years old.
Your score on Openness to Experience is high, indicating you enjoy novelty, variety, and change. You are curious, imaginative, and creative.
Hopefully, staring at monitors for 8 hours a day hasn’t dulled my imagination or creativity. My ability to innovate and find creative ways to generate an edge is my biggest asset. I’ve always felt that I had the ability to look at the market in a different way and dissect problems in a creative manner.
Being creative is great just as long as you’re not bouncing around from strategy to strategy. Find something that works and stick with it. Always maintain your creativity, but use it to iterate rather than wholesale change.
I’d highly recommend testing yourself. Even if you don’t believe in this stuff, the results will cause you to think about how you interact with the world and the give insight into your decision making and interpersonal relationships.
Here are some resources:
The Personality Project (Department of Psychology, Northwestern University)
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DynamicHedge is an equities, futures and derivatives trader based on the West Coast. He runs a long/short opportunistic relative-value strategy within a proprietary trading group. More
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