|
|
Personality
Type and Trading, Eight Part Series
|
|
Personality
Type and Trading: (Part 1)
By Van K.
Tharp, Ph.D.
The
path toward becoming a better trader is usually a path toward
wholeness, and no two paths are identical. Each of us has to begin
where we are in our own life situation. No matter what your path,
you must first determine where you are. What are the patterns in
your life that block you in your trading, your relationships, etc.? Those patterns can be available to you
right now because they show up in your trading and in every other
aspect of your life as well. Unfortunately, in most cases, people
are not aware of them. Thus, the transformation journey often begins
with a crisis. For it is only when an obvious crisis begins that we
wake up to the fact that something is wrong in our lives.
This article, the first in a series, on individual differences or
personalities is to help people determine where they are. Jack
Schwagger has suggested from his experience interviewing
"market wizards" that the most important element of
successful trading is having a trading system that fits your
personality. As a result, I'm going to base this article on the fact
that knowing your personality type is important to finding out where
you are in your journey toward wholeness.
The importance of personality traits comes into play because they
provide a quick mirror of where we are and the neglected parts of
yourself that you must nourish. For example, all of the personality
traits that we are going to examine in this series come in pairs. If
your personality tends to be extraverted, it simply means that you
tend to focus your energy more externally than internally. Wholeness
for you may mean moving more toward an internal focus (e.g.,
determining how you produce your results by your thinking) until you
achieve a balance between focusing on the internal and the external.
Understanding Your Personality
If you've taken the Investment
Psychology Inventory, you probably received a much more
comprehensive personality profile based on the four dimensions of
personality developed by Carl Jung. These include
introversion/extraversion, intuition/sensing, thinking/feeling, and
perceiver/judger. When you evaluate someone along four dimensions,
you arrive at 16 personality types instead of four. This is similar
to the well-known Myers-Briggs profile.
If you haven't taken the Investment
Psychology Inventory, you have two choices. Take the profile and
find your personality type and determine your strengths and
weaknesses for trading. Or, as a second solution, you can got to the
following web site to get a basic Myer-Briggs type test for free: http://www.humanmetrics.com/cgi-win/JTypes2.asp.
When you get your type, look it up on www.google.com.
The sites you find will tell you a lot about yourself. And in this
eight part series, we'll tell you how your type
relates to trading.
Three personality types—the ENTJ (known for their ability to develop
strategies), the INTJ (known for their scientific reasoning), and
the ISTJ (the trustee type person)—combined should constitute about
12% of the population. However, at this time these three groups
represent 50.1% of our current sample. The NTs constitute 45.6% of
our sample, probably because these people are always attempting to
improve themselves.
Given these interesting developments, we can discuss the four
Jungian elements of personality, and how they combine to form
cognitive processing modes and temperaments. We can also discuss how
these modes and temperaments are related to trading success.
Most of us give little thought to how we process and perceive
information in order to make sense out of what is happening. Yet
dramatic differences occur in how people perceive and interpret what
goes on around them. And these differences lead to dramatic
contrasts in behavior and personality.
The next step in this series on personality type and trading we will
examine the four dimensions of personality developed by Carl Jung
and how each of them might influence you as a trader.
Sources:
Jung,
Carl G. Psychological Types. Collected Works of Carl Jung, Volume 6.
Princeton, NJ: Princeton University Press, 1971. Originally
published in 1923.
Myers,
I. Manual: The Myers-Briggs Indicator. Palo-Alto, CA: Consulting
Psychologists Press, 1962.
|
|
Personality
Type and Trading: (Part 2)
By Van K. Tharp, Ph.D.
The
next few parts of this series on personality type and trading will
examine the four dimensions of personality developed by Carl Jung and how each
of them might influence you as a trader:
1) Introversion/Extraversion
2) Sensation/Intuition
3) Thinking/Feeling
4) Judgment/Perception
First we will look at
Introversion/Extraversion.
Introversion/Extraversion (I vs. E).
Jung believed that human beings have a preferred attitude, being either
introverted or extraverted. Although we think of these two terms as describing
whether someone is socially oriented or not, that was not Jung's original
focus. Instead, the extravert has a focus on the outer, physical world, while
the introvert has a focus on the inner, psychological world. However, very few
people are purely "introverted" or "extraverted." Instead,
they apply an inward directed focus in some situations and an outward directed
focus in others. (This will become more understandable later when I
discuss cognitive styles and trading.)
An introverted trader, for example, would focus on his own subjective world
primarily on concepts and ideas. His inner thoughts would predominate. This
type of trader would tend to focus on how they produce their own results. That
does not mean that they cannot be very social and likeable. It just means that
their attention is directed toward the inner world. Only about 25% of the
population is thought to have primarily an introverted focus, but 57.9% of our
sample has such a focus. In contrast, 75% of the population is thought to have
an extraverted focus, but extraverts only represent about 42.1% of our sample.
Extraverted individuals tend to focus on the outer, physical world—actions, objects and persons. People, things, the environment, their career,
the market and their achievement are their primary focus. The extraverted
trader, for example, would search for solutions outside of himself to become
more successful. Since 75% of all people have an extraverted focus, most
traders—especially those with an extraverted focus—tend to be concerned
with what system they can develop to become more successful or with how they
can change their system to become more successful.
Extraverted people tend to be energized by other people, by a party, or by crowds
in the big city. If their
extraversion runs to an extreme they may risk losing their own sense of
identity. For example, if an extraverted trader loses all his capital, and he
has identified himself as a trader, then that loss could result in a total
mental collapse.
The internal/external focus has little to do with trading success--at least in
our sample. About 7% of the introverts had outstanding trading records as
compared with 8% of the extraverts.
Introversion and extraversion both exist in each individual. Most people can
move flexibly between both orientations. However, Jung proposed that when the
individual is unaware, the non-dominant orientation would tend to emerge from
the unconscious.
|
|
Personality
Type and Trading: (Part 3)
By Van K. Tharp, Ph.D.
We have already learned about
Introversion/Extraversion (I vs. E).
Continuing with our series, we will explore the other three dimensions:
-
Sensation/Intuition,
-
Thinking/Feeling
and
-
Judgment/Perception.
Sensation/Intuition
(S vs. N). The two perceptual functions are sensation and intuition. The
sensation orientation involves using the five senses—seeing, hearing,
touching, tasting and smelling—to convey a concrete reality. It is the
function that receives information, from the inner, subjective world and/or
the outer, physical world. Sensation is very connected to the present moment.
While 75% of the population is thought to be sensation dominant, only 39% of
our sample is sensation dominant.
In contrast, intuition is what Jung called "perception by the unconscious
mind." The key characteristic of intuition is imagination. It involves
"seeing the big picture" and "imagining what is possible."
It also involves moving out of the present and encompassing both the past and the
future to determine what is possible. Although 25% of the population is
thought to be intuition dominant, 61% of our sample is intuition dominant.
The intuition function seems to contribute more to success than any other
Jungian function or quality. We had 31 traders in our sample with outstanding
trading records. Among this group, 26 of them were intuition dominant, while
only five of them were sensation dominant. Thus, awareness of the big picture
may be very important to successful trading.
Thinking/Feeling (T vs. F). The two judgmental functions are thinking and feeling. Thinking involves logical thought processes entailing
cause-and-effect reasoning. It facilitates cognition and judgment. In this
particular style, people are concerned with facts, reality, experience,
specifics, and the "here and now." Everything is concrete and
sequential. When people make decisions by thinking, they tend to weigh all the
pros and cons in a sequential way and then make a decision. However, when
trading decisions involve pure "thinking," the trade is usually gone
before the decision is made. Interestingly enough, people generally make
decisions based upon thinking, but they act based on feelings.
Feeling involves making decisions by means of value judgments. It allows us to
determine if a thing is important or not. It involves subjective, personal
values. Does the person like or dislike it? What is the impact on a person? Is
it strong enough to act upon?
If thinking is highly developed in an individual then feeling would be much
less developed and vice versa. And you can probably guess that it takes a lot
of "thinking" to develop a trading system, but it takes
"feeling" to execute the system. Thus, you must be well-balanced in
order to trade well. About 50% of the population tends to be thinking dominant
while the other half tends to be feeling dominant. In our sample, 57% was
thinking dominant, while 43% was feeling dominant.
Top traders in our sample were much more likely to be thinking dominant (by a
6 to 1 ratio) than feeling dominant. However, thinking dominant traders as a
whole were more likely to be losing traders than were feeling dominant traders.
My guess is that the top traders show a good balance between thinking and
feeling, yet are thinking dominant.
Judgment/Perception (J vs. P). The last dichotomy is very deceptive, in
that the names used, judger and perceiver, do not adequately describe the two
processes involved. This dichotomy refers to the amount of closure a person
needs in handling their affairs. Judgers, the first category, want closure,
wanting everything organized and in its place. In contrast, perceivers prefer
fluidity by keeping their options open.
The Judger is apt to feel a sense of urgency until a decision is made. They
establish deadlines and take them seriously. Judgers tend to believe that work
comes before all else—rest or play. Thus, judgers will do all sorts of
preparation, maintenance, and cleaning up afterward with respect to their
work. About half the population tends to have a bent toward closure and thus
be judgers. However, about 72% of our sample showed this type of dominance.
Perceivers tend to be "go with the flow" type people. They resist
making a decision, always wanting, and waiting for, more information. Thus,
when they finally do make a decision, there is always a sense of uneasiness
and restlessness. Perceivers tend to be more playful and easy-going than their
counterpart. They want their work to be enjoyable. However, they can also
become so caught up in a work project that they totally forget about time and
everything else. About half the population is this way. I would expect that
people who have trouble making a decision would stay away from trading. And,
indeed, only 28% of our sample were perceivers.
These four dichotomies can be used to describe 16 different personality types,
as described by Isabel Myers and her mother, Katheryn Briggs. The so-called
Myers-Briggs test divides people into 16 different types, ISTJ, ISTP, ESTP,
ESTJ, ISFJ, ISFP, ESFP, ESFJ, INFJ, INFP, ENFP, ENFJ, INTJ, INTP, ENTP, and
ENTJ. In some ways, I dislike this test because it does tend to put people
into psychological boxes. So rather than going into each of the 16 types, we will begin to look at eight cognitive styles and four temperaments. I
will describe each type and give you my opinions about how it functions in the
process of trading or trading system development.
|
|
Personality
Type and Trading: (Part 4)
By Van K. Tharp, Ph.D.
The Cognitive
Modes
The eight cognitive styles are combinations of what Carl Jung thought of as
the four mental functions (sensing, intuiting, thinking, feeling) combined
with either an internal (introverted) or external (extraverted) orientation.
The relative strength of these eight modes within your personality determines
how you process information and make sense out of your life.
Some of these modes of functioning will be very familiar and comfortable. Yet,
when I explain other styles, you may wonder how anyone could function that
way. These unfamiliar cognitive modes are the ones you have failed to develop
because they do not align with the core beliefs you developed about yourself
(and your relationship to the world) as a young child. At the end of each
description you'll see a rating scale going from one (it's very strange) to
seven (it's very comfortable). Think of the number that you believe best
describes your comfort level with that mode of functioning.
Most people only develop a few of the eight modes and are unaware of their
full potential as human beings. Of course, we all use all eight modes, but the
less developed, more rudimentary ones reside only in the unconscious mind.
None of these modes showed a strong correlation with trading success,
suggesting that each may be important in some way. This week we begin
with the first two of the eight modes: Sensation, introverted and
extroverted.
Introverted
Sensation (IS). IS is the
cognitive mode that allows us to be in touch with our bodies.
Through IS people are able to sense the rhythms of their bodies.
You become aware of how alert you are, how much energy you have, and if
any particular part of your body needs attention.
For example, the ideal diet for you simply amounts to paying attention
to your body. Eat whatever you
seem to crave, and then notice what your body's reaction is to that food.
If you have reasonable introverted sensation, then you will know your
body's response to each food after you've eaten it.
Once you know your body's response, then it will teach you exactly what
you need to eat to attain the ideal nutrition for your body.
Unfortunately, this only works when you have fairly well developed IS.
One
of the market wizards, when he first attended our Peak Performance 101
workshop, told me that he was very attuned to stress in his body.
He said that whenever it seemed to develop, it always started in his
fingertips and then worked its way up his arms and into his body.
I suggested that since he was so attuned to the inner sensations of his
body, he should simply use the sensations as a signal to back off and relax.
Subsequently, he reports that he just does not experience stress any
more. This, to me, is IS at its
best as utilized by a market wizard.
I
believe that IS is critical to the trading task of self analysis.
If you tend be lax doing self-analysis, then it may be because you have
not developed this particular cognitive mode.
Please
record how comfortable you feel with Introverted Sensation.
A rating of one means it seems very strange, and you have trouble imagining
anyone could do it. Four means
you know you do it sometimes, but it is probably just an average skill for
you. Seven means it seems very
comfortable for you, and it is something you do all the time.
1
2
3
4
5
6
7
If
you are weak in IS, start some exercises in which you pay attention to your
body. Spend half an hour each
day, lying down with your eyes closed. Explore
your whole body for feelings and notice what is there that you've missed.
Also while you are at your computer or observing the market, notice any
tensions or unusual feelings you have in your body.
Whatever you notice in either exercise, do something about it.
If you're tense, stretch it out or practice relaxing or meditating.
Extraverted
Sensation (ES). People who
use a finely developed ES find it easy to note details and be in tune with
their environment. ES processing
connects people to the physical aspects of life—the sights, sounds, touches,
aromas, and tastes of the physical world.
It allows one to appreciate sexual contact, the beauty of a symphony,
or the art in a fine painting. People
with a highly developed ES typically have good memories, since they record
details accurately and have no difficulty remembering them accurately.
Everyone
uses ES, but there is a big difference between discerning the difference
between a red and a green traffic light (a basic survival skill) and noticing
subtle shades of differences in a family of colors.
People with highly developed ES skills can match the exact shade of red
and grey in the couch in a room from memory and come home with a paint color
that works perfectly. Those with
average skills would probably have to take a swatch of the fabric with them,
while some of you may have trouble matching the colors even with the
swatch in front of you because "all those reds look the same."
ES
skills extend to all of the
senses. For example, can you
identify a wine just by tasting it? Or
can you recognize people when they enter the room just by their smell?
Or can you recognize someone you haven't been with for years just by
hearing their voice?
Good
ES skills are essential for anyone who must be accurate with details or
concrete facts. It is essential
for a craftsman or a CPA. ES
skills help us keep our feet on the ground and our mind in the present moment.
You
can probably imagine how important ES skills are for any sort of pattern
recognition in the market. If you
expect to be able to react to certain market conditions, because you've
experienced them before, then you need well-developed ES skills.
However, ES skills showed a slight negative correlation to trading
success.
Once
again record how comfortable you feel with this particular mode of
interaction.
1
2
3
4
5
6
7
To
improve your ES skills, you must ground yourself in the present moment.
When you are talking with someone, notice all of the specifics of what
they say. Practice repeating what
they say back to them, repeating as many details as possible.
They'll usually be very flattered that you have listened to them so
closely.
Learn
to identify the aromas and tastes of various herbs and spices.
Memorize different shades of colors until you can verbalize them on
sight. Listen to a band play and
pick out how different the music is from instrument to instrument.
Or look at daily bar charts, bar by bar until you can recognize every
market just by looking at a small sample of bar charts and can say, "Oh,
that's a chart of soybeans in April 1997."
Next
we will cover Intuition, both
introverted and extroverted modes.
|
|
Personality
Type and Trading: (Part 5)
By Van K. Tharp, Ph.D.
The
Cognitive Modes Continued
As I pointed out, some of these modes of functioning will
be very familiar and comfortable to you, while others may leave
you wondering how anyone could function that way. At the end of each
description you'll see a rating scale going from one (it's very
strange) to seven (it's very comfortable). Think of the number
that you believe best describes your comfort level with that mode of
functioning.
Most people only develop a few of the eight modes and are unaware of
their full potential as human beings. Of course, we all use all
eight modes, but the less developed, more rudimentary ones reside
only in the unconscious mind. None of these modes showed a strong
correlation with trading success, suggesting that each may be
important in some way. Previously, we covered the first two of
the eight modes: sensation introverted and sensation
extroverted. Now, we will cover the two modes of intuition.
Introverted
Intuition (IN). According to Jung, IN provides us with a variety
of perspectives for viewing life. When this skill is highly
developed, a person can use these multiple perspectives almost
simultaneously. It allows people to connect with the endless images
of the unconscious and to make inductive leaps, revealing creative
connections between ideas and symbols. It is one of the required
modes of operation for anyone who is involved in developing a
theory: philosophers, theoretical physicists, and those few people
who are good at developing new ideas about how the market works.
Introverted intuition is especially valuable in allowing problems or
situations to be viewed from multiple perspectives. For example, when you are having
difficulties in trading, IN will allow you to view
it from your own perspective, from a dissociated (watching yourself)
perspective, from the perspective of a trader who has the opposite
side of a position from you, from the perspective of a hypothetical
Super Trader—anything you want. It is a very valuable mode of
operation. IN skills showed a slight positive correlation with
trading success.
Record how comfortable you feel with this particular mode of
interaction.
1
2
3
4
5
6
7
To develop IN skills, I would suggest you practice role playing. For
example, relive an argument or discussion from the other person's
point of view. Take a perspective that is entirely different from
the one you usually hold.
Extraverted Intuition (EN). The EN processing skill helps
people see the possibilities in a situation. For example, when you
look at a chart pattern and suddenly become aware of something else
going on in the market, you are using EN skills. When you think
about a particular day in the market and can recall generally what
was going on, without remembering any specific details, you are
using EN. In other words, when you have an overall impression of
something, yet are hard-pressed to give details, then you are using
EN. It is this cognitive mode of processing information that gives
us our hunches.
People with highly developed EN can easily come up with speculative
or imaginative solutions to a problem. They can jump from the
present condition to the outcome without considering a step by step
process. They are great at brainstorming and continually come up
with new ideas. More of our top traders showed EN dominance than any
other processing mode.
Once again record how comfortable you feel with this particular mode
of interaction.
1
2
3
4
5
6
7
To develop EN skills, I would suggest that you start following your
hunches. Practice "guessing" what will happen in the
market tomorrow. Imagine at least three scenarios that could
dramatically change prices in a particular market tomorrow. Or try
an exercise that we use in the Winning Systems Seminar: come up with
at least ten new ways that you could represent market behavior
(e.g., time
versus price).
We
have covered a lot of information thus far in this series. We
will continue with this topic, picking up with the
analysis of the other four remaining modes, thinking and feeling in
both introverted and extroverted forms.
|
|
Personality
Type and Trading: (Part 6)
By Van K. Tharp, Ph.D.
The Cognitive Modes Continued
We have now covered four of the eight
cognitive style combinations which Carl Jung categorized as the four
mental functions (sensing, intuiting, thinking, feeling) combined
with either an internal [introverted] or external [extraverted]
orientation. The relative strength of these eight modes within your
personality determines how you process information and make sense
out of your life.
We have covered sensation
introverted and sensation extroverted, and two modes of intuition.
And we will continue with thinking and feeling in both
introverted and extroverted forms.
Introverted Thinking (IT). IT is a
skill that helps people solve problems involving in concepts, ideas,
or symbols. IT is the process involved in the logical manipulation
of ideas, as in philosophical reasoning or mathematics. If you are
good in mathematics, you probably have highly developed IT skills.
This skill is important in hypothesis testing.
Thus, you might use EN to come up with a new concept about the
market. However, IT skills would be important to test out that
hypothesis to determine whether or not it would be profitable.
People for whom IT is highly developed usually
begin problem solving with a strong conviction. For example, in
developing a new market theory, you would probably begin with a
strong conviction that such a theory exists.
Traders who rely strongly on IT also tend to
work best by themselves. They can remain highly focused and carry an
idea through to completion. These individuals are strongly concerned
with expanding their knowledge and understanding of markets (and the
world). They want to explain their reasoning and justify their
conclusions.
More traders in our sample showed IT dominance
than any other cognitive style and this skill was important to the
top traders. However, if you exclude the top group, it showed a
negative correlation with trading success—probably because IT
skills are useless without the ability to develop a useful
hypothesis for trading.
Record how comfortable you feel with the IT
mode of interaction by picking the most appropriate number below.
1
2
3
4
5
6
7
To develop IT skills, I would suggest that you
take a math class (especially higher math) or a course in logic. Or
find an area that interests you, such as a particular aspect of the
market, and memorize the definitions of the concepts and terms. Once
you've done that, compare and contrast the concepts so that you know
how they are similar and how they differ.
Extraverted Thinking (ET). When logical
problem solving is connected to the external world, it is called
extraverted thinking (ET). This mode of thinking allows one to take
a problem and break it down into component parts. An extraordinary
example of the ET mode is provided by Chuck LeBeau and David Lucas
in their book, Computer Analysis of the Futures Market.1
The authors break down the task of system design and development
into component parts and then solve each part of the puzzle
separately.
The ET mode is also used when one finds a goal
to attain and then breaks down the attainment of that goal into
distinct, sequential tasks, determined in part by their cause and
effect relationships. For example, the task of becoming a proficient
trader involves the tasks of self-assessment, self-transformation,
system development, system testing, and then following the ten tasks
of trading. I also used ET to develop that sequence.
Since personal problems can affect the type of
system one uses to trade, I recommend that people do a complete
psychological assessment, followed by a psychological clearing,
prior to beginning the task of developing a system. Why? Because the
system one might develop after clearing out any strong issues will
probably be much more profitable than anything developed prior to
the clearing. And, of course, one must develop and test a system
before one can actually trade.
Generally, people with highly developed ET
will determine a series of priorities through logic and reasoning.
They will weigh the pros and cons of each possible solution before
deciding what to do. ET is usually a methodical, step-by-step
process in which each component is carefully considered. People with
a strong ET cognitive process will usually have a strong code of
conduct or system of rules about how to lead their lives. They tend
to be focused and very efficient in getting the job done. Fairly
well developed ET is probably essential for good trading if you are
starting from the beginning. ET is also a cognitive skill that is
highly developed in our top traders.
Record how comfortable you feel with the ET
mode of interaction by picking the most appropriate number below.
1
2
3
4
5
6
7
To develop ET skills, I would suggest that you
make a list at the end of the day of what you would like to
accomplish the next day. Determine the pros and cons of each task
and then determine what order the tasks must be accomplished in
order to make the most efficient use of your time.
Introverted Feeling (IF). When one uses
the IF mode of cognitive processing, one connects with the values
and feelings deep within. Your inner values tend to rule your life.
They may be personal, abstract (e.g., independence), spiritual, or
even mystical. These values tend to strongly connect the person who
uses them to what he or she likes and/or dislikes. For example, a
person following the IF mode will tend to honor what is within more
than what is outside of themselves. Thus, it usually takes IF
processing to ignore the crowd and go with a "gut feel"
about a trade.
A person for whom IF is highly developed will
probably be a very poor systems trader, always preferring to go with
internal feelings over external signals. This type of trading would
probably only work if the person was so highly trained as to have
very accurate internal feelings. In our sample, IF processing showed
a negative correlation with trading success and it was seldom
dominant among top traders probably because these people are not
tuned into what is going on in the market.
Record how comfortable you feel with the IF
mode of interaction by picking the most appropriate number below.
1
2
3
4
5
6
7
To develop IF skills, I would suggest that you
take on a new project and complete it by only doing what you like to
do. Consult only your own inner feelings for whether or not you like
it. And thus proceed by only doing what you like to do. Avoid any
other reasons for doing the project except to say, "I like
it." Do not give in to group pressure and do not change your
schedule or what you are doing to accommodate others.
Extraverted Feeling (EF). EF processing
helps us connect to other human beings. Through it we are able to
share their experiences and recognize their intrinsic value. It is a
very important ingredient to developing significant human
relationships.
EF processing always brings the
"human" factor into the decision-making process. For
example, EF dominant people tend to strongly adhere to the standards
and values of the group to which they belong. Most institutional
traders are selected because they have this quality. However, it
probably has a negative correlation with successful trading. EF
traders tend to be crowd followers. EF people tend to suppress their
own needs and desires in order to promote harmony because
relationships tend to be of primary importance for them.
I would expect someone with dominant EF
processing to be a poor trader. However, it showed a positive
correlation with trading success in our sample. EF processing might
be useful if other modes of processing were also highly developed
(e.g., ET, IT, EN) because it could help a trader understand what
other traders are doing without necessarily influencing how he
trades. For example, a trader with highly developed EN skills might
come up with some important insights about what is happening in the
market. And if those skills are combined with strong ET or IF
skills, it could result in excellent trading decisions.
Record how comfortable you feel with the EF
mode of interaction by picking the most appropriate number below.
1
2
3
4
5
6
7
To develop EF skills, I would suggest taking
on a project in which you continually place the needs and wants of
others before your own. Change your plans to accommodate what others
want. Take time to "be" with other people and show genuine
concern for what is happening in their lives. Also, find ways to
give sincere compliments and express your appreciation to others for
what they do for you.
1 LeBeau, C. and Lucas, D. Computer
Analysis of the Futures Market. 1992. An excellent book that
breaks down the problem of trading system design into component
parts and then deals with each problem separately. I highly
recommend this book.
|
|
Personality
Type and Trading: (Part 7)
By Van K. Tharp, Ph.D.
So far in our continuing series on Personality
Type and Trading we have covered a lot of ground. We have examined
all of the various aspects of the Myers-Briggs personality profile
and elements of these profiles related to trading.
In our last leg of the discussion we
will begin with the Four Temperaments.
Psychologists David Keirsey and Marilyn Bates
believe that an important basis of personality are four key
temperaments. Looking from a mythological stand point, these
correspond to the characteristics that Zeus told his gods to help
man adopt. Dionysus was to teach man joy. Epimetheus was to give man a sense of
duty, while Prometheus was to give man science. And,
finally, Apollo was to give man the spirit of the gods.
Dionysian Temperament: The Dionysian Temperament occurs in
those people for whom sensation (S) and Perception (P) are dominant.
These SP people (ISTPs, ESTPs, ISFPs, and ESFPs) comprise about 38%
of the population.
SPs tend to gravitate toward trading because they have a strong need
for freedom and independence. They don't want obligations or to be
tied down in any way. The ideal life is to do what he wants to do
when he wants to do it. Action is the key for these people and they
tend to be impulsive. Actually, they want to be impulsive because
that gives them their free spirit and sense of aliveness.
People with this type of temperament work best in crises and they
even will create a crisis just to make things more interesting. You
can imagine what happens when this type of behavior is brought into
the trading arena.
The Myers-Brigg's personality types for which we have little data
include all four SP categories. In fact, although SPs constitute 38%
of the population, they only represent about 8.3% of our sample.
Why? First, I suspect that SPs do not last long as traders and those
that have enough money to last for a while are not that interested
in self-knowledge, just the action of being in the market. Thus, SPs
will tend to gravitate toward very short-term systems in which the
odds are definitely against them, but they are still willing
to take their chances because that's where the action is. In fact,
the SP probably could not do well with a longer term orientation,
because that would just not fit his impulsive nature.
People with SP temperaments are good with tools. Thus, I would
expect them to have the potential to work well with computers and
thus do fairly well in that aspect of trading.
Record how comfortable you feel with the SP temperament by picking
the most appropriate number below.
1
2
3
4
5
6
7
Although I do not recommend that one apply an
SP temperament to trading, unless you want to forget about profits
and just enjoy the action, the SP temperament is an excellent one to
bring to many aspects of living. To develop more of this trait, I
would suggest that you practice being much more spontaneous in what
you do with your life. For example, pick one day each week in which
you do everything just for the fun of doing it.
The Epimethean Temperament: The Epimethean Temperament occurs
in people for whom the sensation (S) and judgement (J) qualities
dominate. These SJs (ISFJs, ESFJs, ISTJs, and ESTJs) also constitute
about 38% of the population. These people are dominated by a sense
of duty. They exist primarily to be useful to the social units to
which they belong.
Epimetheus was the husband of Pandora, who let all manner of ills
escape onto mankind—old age, sickness, insanity, vice, and
passion—when she opened her famous box. Yet Epimetheus, although
forced to endure the result of his wife's actions, steadfastly stood
by her and remained devoted to her.
The SJ personality has a strong need to belong. But he must be the
giver, not the receiver. He must earn his belongingness. As a
result, I would not expect SJs to be that happy in the lonely world
of trading unless they had a major social system for support (i.e.,
strong family support). However, the SJ might be quite content in an
institutional trading situation.
However, the SJ personality is constantly seeking out what he is
"supposed to do" to belong. They typically do well in
school, because the rules are quite obvious. However, in the trading
arena the "supposed to do" rules are not that obvious. In
fact, if you ask enough people they will probably give you
advice that is the exact opposite of what will
produce trading success. Indeed, our sample of SJ traders produced
below-average trading results. Nevertheless, the SJ usually has a
very strong work ethic, which could help him overcome a lot of
difficulties.
The SJ will shine in one of the ten tasks of trading—mental
rehearsal. Why? The SJ is likely to envision all sorts of disasters
and constantly be trying to figure out how to overcome them. Indeed,
his personal motto is usually to be prepared. Unfortunately, much of
his idea of being prepared involves following traditions (e.g., the
"I go by the book" motto) and this also may not breed
success in the marketplace.
Record how comfortable you feel with the SJ temperament by picking
the most appropriate number below.
1
2
3
4
5
6
7
To develop SJ skills, develop a total disaster
control plan for your trading. Think of anything and everything
that could go wrong in your trading. And, if your list does not
include at least 100 items, then you need to continue until you have
that many. Once you have your list, then come up with three ways to
either circumvent each disaster or to overcome it if it does happen.
|
|
Personality
Type and Trading: (Final, Part 8)
By Van K. Tharp, Ph.D.
This is the final installation in the on-going
series on Personality Type and Trading. We have examined
all of the various aspects of the Myers-Briggs personality profile
and elements of these profiles related to trading.
Psychologists David Keirsey and Marilyn Bates
believe that an important basis of personality are four key
temperaments. Looking from a mythological stand point, these
correspond to the characteristics that Zeus told his gods to help
man adopt. Dionysus was to teach man joy. Epimetheus was to give man a sense of
duty, while Prometheus was to give man science. And,
finally, Apollo was to give man the spirit of the gods. We end
this series with the final two.
The
Promethean Temperament: The
Promethean Temperament comes into being when the qualities of
intuition (N) and thinking (T) are dominant.
The NT temperament (INTP, ENTP, INTJ, ENTJ) is only found on
average in about 2% of the population.
As a result, NT people must grow up in an environment full of
people who are usually quite different from them.
For example, about one family in 16 would have both parents
as Ns and only one in a thousand would have both parents as NTs.
The
NT personality is looking for power over nature: to be able to predict, control and explain realities.
Thus, the NT trader would be one who wants to predict,
control and explain the markets, much of which is the antithesis of
good trading. However,
since his ultimate goal is to be a good/great trader, the issue is
simply how to get there. He
has a strong drive to continually improve (as opposed to the SPs
drive to simply act). As
a result, I would generally expect this group to produce more good
traders than any other. Our
data suggests this to be the case!
First, we have a lot of data on the NT personality types.
Although they only constitute about 2% of the population, NTs
constitute 45.2% of our sample population—a truly amazing
statistic. Among our NT
traders, about 10% show outstanding trading records—a higher
percentage than any of the other temperaments.
The
NT is very self-critical. He
badgers himself about his own errors.
He taxes himself with the resolve to improve.
If his pushing is used as a learning process, then he is
bound to improve. However,
the NT can easily get caught up in the perfectionist trap, which can
prevent him from getting anywhere.
For example, if the NT's self-criticism is tied into his/her
self esteem, then he can become frozen into inaction or into
repeating the same task because he is not satisfied with the
results. However, I
have found that NTs show tremendous improvement when they go through
my private consultation program.
The
NT is likely to know that recreation is important to his health and
overall well-being. However,
his play has little spontaneity or fun.
Instead, NT play is an exercise in conquest and being the
best. He does not allow
himself to make any mistakes, logical errors, and yet,
paradoxically, requires that he have fun because that's what people
are supposed to do when they're playing.
The
trader who is an NT will live his work.
If markets stay open 24 hours, he is likely to try to follow
the market for 24-hours just because the market exists and missing
something might be making a mistake.
He wants to be the best possible trader, so he will do
whatever he can to be successful.
He is extremely vulnerable to the "all work, no
play"
syndrome and this kind of attitude can lead to a very out-of
-balance lifestyle.
The
NT wants to be the scientific trader.
They are drawn to occupations that have a logical
understanding, in which they can master some new concept about
trading or design some great new trading system.
He has an inquiring attitude and deals with others in a
straightforward, albeit cold, approach.
The
NT generally focuses on the future, trying to figure out what might
happen next. And once
he masters a challenge, he is very likely to move on to another one.
Why? Because his
goal is competency in every field.
Thus, his goal might be to achieve greatness in trading, but
as soon as he receives it or thinks he has it, he is likely to move
on to something else.
Record
how comfortable you feel with the NT temperament by picking the most
appropriate number below.
1
2
3
4
5
6
7
To
develop NT skills, spend at least one day a week reading everything
you can about the markets. Make
a list of 50 ways you can improve your trading and then work
diligently to adopt each of those ways.
The
Apollonian Temperament. The
Apollonian temperament involves a combination of intuition (N) and
feeling (F). Apollo
was the messenger of the gods and as such provides a direct link
between man and the gods. Thus,
NFs are involved in a search for self-actualization—a search for
"being" and their mission in life.
The NF is just trying to be himself, nothing more and nothing
less. He is constantly
wondering, "How can I be the kind of person I really am?"
as he hungers for self-actualization, meaning and a unique identity.
The
NF person wants authenticity and integrity.
There must be no facade, no mask, no role-playing, no
pretense, etc.—just genuine harmony with the inner experiences of
the self. The NFs
tend to be great persuaders as they form the majority of the world's
writers, therapists and clergy.
They love to transmit ideas and attitudes to others as they
strive toward a vision of perfection.
NFs
place a strong role on developing relationships—usually giving much
more than he expects in return.
And he is always willing to give strongly to it as long as he
can get some sort of response in return.
The
NF also has an extraordinary ability to appear to others what the
other person wants them to be.
Thus, they make great actors, as they take on each role
completely. And
the NF person does not mind that others see him as something other
than what he is as they would only communicate who they really are
to those with whom they have a very deep relationship.
Approximately
16% of our sample of traders are of the NF temperament.
This is quite similar to the one to two percent thought to
exist in the population at large.
I would expect that NFs would probably enjoy participation in
the market as a chance to learn about themselves.
Our results tend to suggest that ENFs (whose focus for
meaning is directed outward) tend to have above average trading
records, whereas INFs (an inward directed focus toward meaning) tend
to have below average trading records.
The
NF person is future oriented, as is the NT, but his focus is on the
possibilities in people in contrast to the NTs focus on
possibilities in principles.
Record
how comfortable you feel with the NF Temperament by picking the most
appropriate number below.
1
2
3
4
5
6
7
To
develop NF skills, spend some time thinking about your purpose in
life. What is your
mission? If you had six
months left to live, what would you do with your life? If
you had all the money you could possibly spend, how would you live
your life? What do you
find in common with your three answers?
Does it involve trading?
Now figure out how you can change your life and your trading
to live congruently with your purpose and mission in life.
While the Myers-Briggs is a great tool and
among the most well-known and widely used measure of personality
traits, there are others. My March 2004 Market Mastery Newsletter
featured an article about the Enneagram typology test. This issue
also relates the Enneagram personality types to trading and offers
area of focus for developing helpful traits. If you don't subscribe
you can purchase the single
issue for $19.95.
About the Author: Trading Coach Dr. Van K
Tharp, is widely recognized for his best-selling book Trade Your
Way to Financial Freedom and his classic Peak Performance
Home Study Course for traders and investors. Visit him at www.iitm.com
for a FREE trading game or to sign up for his FREE weekly
newsletter.
|
|
Last revised: August 04, 2011
|
|
