Can personality influence trading?

I normally say you don’t need any specific background or skills to be a trader, nevertheless being mathematically and statistically oriented?will help you better understand the basics.

We are all differently “wired” and our abilities and talents make us a better fit for different types of roles.

Although personality tests can be dangerous – like any other form of categorisation – I guess there’s no harm taking one every now and then, to access your main personality treats and verify if any features have changed as you accrue experience, pain, and wisdom.

Self-awareness is very important for each person to understand his/her nature and act consistently with it.?

As a professional coach I am a huge fan of the Myers Briggs Type Indicator (MBTI), presented as a self-questionnaire that scores people across four continuums based on their answers: introversion (I) or extraversion (E), sensing (S) or intuition (N), thinking (T) or feeling (F), and judging (J) or perceiving (P).

Naturally we are blends of each of the four dichotomies, but each individual tends to have a preference or dominant function in each of the categories. That combination results in a four-letter personality type based on the MBTI framework.

If you want to check your personality type, click here.?

If you have time to read the full article, let me take you through each of the four category ranges. I’ll describe within each, the best suited to success in the trading profession, according to experts.

Introversion (I) vs. Extraversion (E)

This dimension helps to describe how you?manage your energy.

An Extraversion dominant individual tends to be more externally focused and socializes more readily because he/she feels energized by the company of others.

Trading can often be a very solitary thing. But the internet is filled with extroverted and egocentric traders that like to comment their trades, opinions and forecasts.

The truth is this dimension is irrelevant for the effectiveness of your trading.

Sensing (S) vs. Intuition (N)

This dimension describes how you?process information: if you are a sensor you will be more interested in specifics and details; if you are intuitive your style of thinking is more creative and abstract.

In trading, things are always changing so it’s crucial that you have a broad view and can see the big picture, spotting patterns and connections about things.?However, even though the focus of Sensing individuals tends to be narrower, they can play a critical role because nailing down the details is also important, specially to assure a consistent risk management strategy.?

That being said it is relevant to be a moderate Intuitive type.

Feeling (F) vs. Thinking (T)

Feeling (F) versus Thinking (T) describes your?orientation to decision-making?and is in some ways a reflection of your?personal values. Some describe this dimension as “head versus heart”.

Thinkers pursue a logical analysis of objective facts and use reasoning to determine the best course of action. Feelers will be more influenced by personal appeals.?As you might imagine, in trading, there is a very strong preference for Thinking over Feeling since emotions can be so harmful.?

Traders should have a Strong Thinking (T) personality.

Perceiving (P) vs. Judging (J)

The Perceiving vs. Judging dimension describes how you?manage?your life?and preferences for structure and order.

Judgers or planners are structured people that like to schedule things and dislike spontaneous changes.?Perceivers are more flexible and spontaneous.?

Being a Judging type has its usefulness in trading in terms of having a plan and being well-disciplined. However, having flexibility and being willing to adapt to spontaneous changes is important. Being able to see new things and possibilities is valuable as well.

In trading, having either P or J dominance is not necessarily an advantage.

Indeed a trader should have a balance between Perceiving (P) and Judging (J).

Studies have showed that NT dominance is common among successful traders.

N’s (Intuitive) tend to see the big picture and anticipate events and possibilities before they happen. T’s (Thinkers) prefer to use rational objectivity and logical analysis in their decision-making criteria rather than emotions, gut feelings, personal judgments, and opinions.

However NT personality is only about 10 percent of the population.

Does this mean, if don't have these personality traits you should give up on trading? No. Knowing theses dimensions helps each person understand boundaries and work on those areas that can undermine performance.

Any self-awareness tool, in any job, or even in any personal circumstance, is always useful for one to overcome weaknesses and find ways for self-improvement.