Unfortunately most traders do not understand or take account of their own personality type and how it affects their trading performance.
Yet matching trading style and strategy to your personality type is an absolute determinant of success or failure. Whilst we would all like to be full time forex traders, and break free from the shackles of the daily routine, for some people, trading may not the solution, because their values and beliefs do not allow them to accept that in trading one has to accept both profit and loss.
However it is still possible for these traders to succeed by modifying their approach to the market. It may simply be a case of changing the trading strategy from an aggressive one, to a more conservative approach, or perhaps moving from an intraday style to a longer term trend trading style.
Online trading personality test
The challenge for many of us, is that we have to be honest with ourselves and be introspective, which is not easy. After all, it’s often hard for us to accept that we are far from perfect, and harder still to come to terms with our own faults or shortcomings. However, if we can, then this is how we start to build our path to success, playing to our strengths, and recognising our weaknesses, a key part of trading success.
That is why an online personality test can prove so valuable. It removes the subjective elements of self assessment. With an online test our true trading personality is revealed, and highlights our strengths and weaknesses accordingly. The most accurate test available for this uses what is known as the 5 personality dimensions.
The five personality dimensions
Many of the world’s greatest thinkers have tried to understand the complexities of human personality. While Freud, Galton and Jung were busy wasting their time exploring dreams, the shape of skulls or looking at the stars, others focused on language and in particular the words people use to describe themselves, speculating that spoken words accurately reflect fundamental dimensions of personality.
In the biggest ever survey of human personality, spanning 40 years, several large scale studies from different countries and cultures confirmed the presence of five fundamental dimensions of personality.
Thousands of people were asked to rate themselves and others in numerous tests, so since the 1990’s it has been acknowledged in scientific circles that the five dimensions ( or the BIG FIVE as they are be known) are the best and most accurate representation of human personality traits.
Although they have various labels they are most commonly referred to as:
and these can easily be remembered using the acronyms OCEAN or CANOE.
Each dimension is seen as a continuous scale running from high to low, and everyone can be described by five scores that indicate where they sit on each scale. Additional work has shown that the dimensions are determined by a combination of genes and childhood experiences, and that they tend to remain unchanged throughout a person’s life.
The dimensions influence almost every aspect of a person’s behaviour including relationships, performance in the workplace, leisure activities, consumer choice, religious and political beliefs, creativity, sense of humour and health. So what lies at the heart of these five dimensions and what does it mean to obtain a high or low score on each of them?
Openness represents the degree to which a person seeks and appreciates new, interesting and unusual experiences.
High scorers are curious and broad-minded. They get bored easily, but are particularly good at tolerating ambiguity and are skilled at seeing situations and problems from many different perspectives.They are creative, original, wise, funny, imaginative and unconventional.
They have a rich inner life, like new ideas, tend to remember their dreams and make good hypnotic subjects. In contrast, low scorers tend to be more conventional, down to earth and better able to focus on the practical side of things. They are more comfortable with familiar places and food and tend to work through problems on a step by step basis.
Conscientiousness reflects the degree of organization, persistence and self-discipline employed to achieve goals. High scorers are very organized, reliable, hard-working, persevering and forego short term rewards for long term success.
They tend to do well in the workplace, keep their New Year resolutions and are highly punctual. They also generally live significantly longer than others because they don’t tend to engage in high risk behaviours, such as reckless driving, and are far more likely to exercise, eat a balanced diet and have regular medical check ups.
Low scorers tends to be less reliable, more easy going and hedonistic. They are harder to motivate and more easily distracted, but can show greater flexibility in the face of changing circumstances.
Extraversion reflects the need for stimulation from the outside world and other people. Those who obtain high scores on this dimension are fun to be with, impulsive, optimistic, happy, enjoy the company of others, and have a wide circle of friends and acquaintances. They prefer to lead rather than follow, enjoy aggressive and sexually explicit humour, drink more, are skilled at multi-tasking, strive for instant gratification, have more sexual partners than others and are more likely to cheat on their partner.
Low scorers tend to be far more considered, controlled and reserved. Their social life revolves around a relatively small number of very close friends and they prefer reading a good book to a night out on the town. They are more sensitive to pain, good at focusing on a single task, prefer more intellectual forms of humour such as puns and prefer to work in closed offices with few distractions.
Agreeableness is the degree to which a person cares about others. High scorers are trustworthy, altruistic, kind, affectionate and, perhaps more important of all, likeable. They are less likely to divorce, are perceived much more favourably in job interviews and are more likely to be promoted at work. Low scorers tend to be far more aggressive, hostile and uncooperative.
They tend to see things from their own point of view,and value being right over caring about other people’s thoughts and feelings. They perform better in situations that require tough-mindedness and are less likely to be taken advantage of by others.
Neuroticism reflects the degree to which a person is emotionally stable and able to cope with potentially stressful situations. High scorers are far more prone to worry, have low self esteem, set themselves unrealistic aspirations and frequently experience a range of negative emotions including distress, hostility and envy.
Their strong need to be loved, coupled with low self esteem can lead to them forming overly possessive and dependent relationships. Low scorers tend to be calm, relaxed, resilient in the face of failure and emotionally secure. They are unfazed by negative life events, skilled at using humour to reduce anxiety in themselves and others, cope well with misfortune and sometimes thrive on stress.
Most psychologists now believe that the apparent complexity of human personality is an illusion. In reality, people vary on just five fundamental dimensions. Understand these dimensions and you gain an important insight into your behaviour and thinking. Likewise, being able to quickly understand the personality of people around you will help you understand their actions and how best to communicate with them.
The key is that whatever personality test you take, you will have to accept the findings, and use them to develop a trading strategy that suits you, not just in terms of your lifestyle and commitments, but in terms of your personality. Play to you strengths and you will succeed. Recognise your faults or your weaknesses and develop your trading style to minimise their impact. It’s common sense really, but important nevertheless.