Trader Personality Types: Don’t Fight Your Personality // Ep. 32

In This Episode

• Learn about Walter's 4 trader personality types
• Learn about Hugh's 2 trader personality types
• Find out which type you are
• What happened when someone bet against Walter

Learn to Work With Your Personality Types

Many newer traders think that they have to emulate another successful trader.

This can lead to years of pain and frustration.

However, traders who learn to work with their personality and have proper motivation become successful much faster. Find out what we've learned about how to work with your strengths in trading and the different trading personality types out there.

Read the Transcript:

Hugh: Hi, Walter. What are the basic trading personality types that you've seen?

Walter: It depends on the dimensions you're looking at. So I would break people down into two categories and would be really simple. People who focus on the reward and there's people who focus on the pain. And then, there are people who are super conscientious and there are people who are not so much. So we'll just do those four things. 

I  believe what you want to do is focus on the pain but also be conscientious. I think the worst combination. If you drew like you know a box with four spots, do you know what I mean? So you could be really conscientious and focused on pain which is basically losses in trading. 

If you're there in that area what that means is you're probably not going to risk too much. Now you can go extreme. I know this guy; he was the co-founder of Oanda and he was super extreme like too far. He was just like risking zero-point-one percent and stuff like that you know. He was really, really low, low, low risk aversive.

So the other side, you have those four squares. You have risk averse or focus on the pain and are very conscientious. Conscientious just means like you're very meticulous and you're aware of what you're doing and you're not sloppy. So someone who's very good at being organized is conscientious and it also helps to be self-reflective too but that doesn't necessarily mean you know conscientiousness may or may not relate to that.

Hugh: Hey there! I hope you find this episode useful. I just want to let you know that Walter and I give away something valuable every month that helps traders improve their skills. You can enter to win by simply leaving an iTunes review and leaving a comment on our YouTube videos.

At the end of each month, we'll look at the comments and reviews from the month and we'll pick a winner at random. Each comment and each review counts for one entry during the month that it's pitted.

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Walter: Then if you're focused on the reward and you're low in conscientiousness, that would be the worst because in that case all you really think about is how much trading can make you. You don't consider the draw downs, the losing streaks and you're not very good at it.

This is the kind of person that's always swapping systems and like, “Oh! So-and-so said to buy the Euro so I'm just going to do that because you know he's always right”. Even though you've never tested anything or his strategy. Just kind of like that sort of thing.

You can do a conscientiousness test. We can put that in the show notes and see where you are there but that's what you want. You want to be higher on conscientiousness and you kind of want to focus on the risk or the pain of trading because that's what's going to end up. Ending the game for you.

It's not the reward. The reward is great and it's great to look at that. It's great to target that. The driving feature of your system should be dependent upon the risk side of it because that's going to define how long you get to play the game. So that's what I would say; that's how I look at it. Those two dimensions with two categories. I know it's really simple but that's an easy way to see it.

Hugh: Well that makes sense. I think for me it's like people are either focused or unfocused. Focused people tend to figure it out and if you're not focused then they tend to go off do something else and you know go through houses or something like that.

Walter: Yeah, exactly. It's a means to an end. If you really press every trader, they'll probably even in the beginning when you say, “Oh, I love it” and all that, they'll still tell you it's a means to an end you know and that's true but you're right. There are people who are totally determined.  

I remember there was a comedian and his parents were like, “What? You're going to be a comedian? A are you serious? That's ridiculous. You'll never make it” or whatever. He's like, “Has anyone made it before as a comedian?” They're like, “Well, yeah.” He's like, “Well then, I'll figure it out.” 

Those are the kinds of people like the same in trading. Like, “Oh, you're going to be a trader? Everyone loses money blah, blah, blah.” “Well, has anyone ever figured out how to trade? I'm going to do it” You know that's the kind of approach I think that works. It can be painful. 

There are shortcuts. Information is helpful but too much information can get you off track. I mean, there's so many things you have to keep in mind but I would definitely say that's a big factor of what you pointed out; that's a huge one.

You know when I was in undergraduate school, one of my Professors she kind of made a side bet with her lab assistant. She didn't know I was dating her lab assistant. There was me and my other friend, we were both trying to get into graduate school because we both wanted to get our PhD and my friend was way smarter than I ever would be.

He was naturally gifted at a lot of things and she said to the lab assistant, who was my girlfriend and she didn't know. She said, “Which one do you think is going to go further or whatever in Psychology?” The Professor basically bet on my friend you see because he's way smarter but he's not really that motivated.

We all knew that he was really smart but he wasn't that motivated. He never really had to try and then my girlfriend said, “I don't know. What about you know Walter? He's  super motivated.” She's like, “Yeah but he's not that smart.” It was pretty funny. Anyway, fast forward. 

My friend went to graduate school for a year and dropped out. I went through it. So it's exactly what you're saying basically. At least in this one instance. I agree. Motivation is true man. If you have that motivation and you're determined no matter what, then you'll find a way. You will find a way. You just have to do it long enough and then you can get it. You can definitely get it.

Hugh: For sure, yeah. Well, talking about personality types, what do you think about all these personality type tests? Do they help? Do you think they just hinder?

Walter: It depends on what you're trying to do, I guess. You know this is a big thing in Psychology, in Personality Psychology. People always talk bad like the one I was telling you about the conscientiousness, that's from one called the Big Five. They talk about the five dimensions and it's kind of like intelligence.

In Psychology, intelligence is a hot topic too because people go, “What is it? Is it a general thing or is it like individual specific things?” It's a big debate. If you're a person who's trying to get better at trading then I do believe there are some tests that can help you at least become more self-aware and probably focus on something. Like if you identify something is your weakness then that's really helpful; that's a very good thing to know.

It's also kind of which I think is what you're hinting at. It's also kind of taken to an extreme. Where it's like you take this test and you'll know for sure if you're going to make it. Like you know that's not, do you know what I mean? That's like because personality changes, that's another thing. We used to think that it was like a solid set, not true. Personality changes. 

You can become more conscientious or you can become less conscientious. You can become more determined and you can change your mindset from a defeatist sort of, “Oh, what was me? Everything always you know, my life! I always have bad luck” to being more of a “I am going to make my own look. I am going to bounce back from this. I'm going to make this work” sort of thing. So totally possible to build up things like resilience, conscientiousness, all that stuff.

Hugh: Yeah, it's true and I think when companies hire just based on like, not just but primarily based on things like Myers and Briggs and all that kind of stuff I think it's just very one-dimensional. At least in my experience if you take several of these tests and you kind of pick out the parts that resonate with you, those are the ones that are usually the things that you need to work on; either your strengths or your weaknesses, right?

Walter: And not everyone's honest and not all of them have a lie scale too. Some of these tests have a lie scale and that will get flagged and then when they interpret the test they'll be like,  “Oh, it's likely that they weren't being honest with us.” 

I had a really good professor in a personality class and he was saying, “We give people personality tests because we can't follow them around. If we really want to know what someone was like, we would just follow them around all day.” Which is exactly what you're saying.

If you were going to go to a job and they wanted to hire you, they could give you a personality test and try and figure like, “Okay, you know this is what you're like” Or, why don't they just give you a trial. A sixty-day trial that you worked there for a while and they'll see. Are you going to be good at this? Are you going to pick it up or are you not? That sort of thing so I have to say that Psychology is such a new field and there's so many things we don't know.

I mean, I think about things in medicine that we don't know but at least medicine's been around longer you know. Psychology is just such a new field where it's really the early days and some of the things that we thought in the sixties are completely thrown away today you know so your point is well taken.

Anyone who tells you that you were this because you took Myers and Brigg and you came out as that or whatever it's going to change. The way that we think of personality is going to change. Just like it has it has already. We already know that it's more fluid than we ever thought.

Hugh: It really depends on the situation too like under stress, you might have different…

Walter: Yeah, ecosystems. Exactly and so when you're in different environments, you adopt a different you know and you probably notice that like if you're at home, you'll slip into the one when you're around your parents; when you're around certain friends; when you're around a work environment; when you're around like a professional conference environment or whatever it's always, you're always going to be like a little bit different. 

You adopt differently. You might be super outgoing and gregarious with your circle of friends but then you go to a conference and you kind of withdraw you just kind of watch. You don't reach out and make friends until like you said you know. We talked about this in another episode like later on at the bar when everyone's got some drinks in them or whatever you know then maybe you make it a bit easier for you or whatever. So I agree. It's definitely dependent on where you're at for sure.

Hugh: All right, cool. Thanks, Walter.

Walter: Thank you.

Hugh: All the information in this podcast is for educational and informational purposes only and is not trading or investment advice.

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