The Promethian Trader
I may be projecting a little here, but I suspect that most who are new to trading generally approach the subject as a problem largely consisting of how to build and implement a consistently profitable trading system.
While there are several excellent blogs that deal largely with the trader’s personality (most notably Brett Steenbarger’s TraderFeed and Corey Rosenblum’s Afraid to Trade), I have yet to say much of anything on this subject, even though I am strongly of the opinion that eventually all traders will realize psychology is the most important part of trading, even those who are using mechanical systems. In Trade Your Way to Financial Freedom, noted author and trading consultant (and occasional blogger too) Van Tharp puts it this way:
“When I’ve had discussions about what’s important to trading, three areas typically come up: psychology, money management (i.e., position sizing), and system development. Most people emphasize system development and de-emphasize the other two topics. More sophisticated people suggest that all three aspects are important, but that psychology is the most important (about 60%), position sizing is the next most important (about 30%), and system development is the least important (about 10%).”
With this in mind, I was most interested to recently discover that Tharp had published an eight part series outlining some of his thoughts on personality types and trading. For those who may still be skeptical of the importance of psychology, before dismissing the articles, be sure to jump down to Part Eight, where Tharp talks about the Promethian Temperament. Tharp tosses out two statistics that I found particularly interesting:
- The Promethian Temperament (xNTx in Myers-Briggs speak) occurs in his sample trader population at a rate more than twenty times that of the general population; and
- “Among our NT traders, about 10% show outstanding trading records—a higher percentage than any of the other temperaments.”
Tharp goes on to explain that despite the fact that NT traders are handicapped by a strong desire to predict, control and explain the markets, they overcome this and are successful as a result of their insistence on acquiring more self-knowledge, continuously improving their craft, and applying as much science as possible to potential trading approaches.
If you are an NT, as I am, you probably know all of this already, but you might want to read the article closely to look for the shortcomings that NTs are prone to. If you are not an NT trader, consider how your Myers-Briggs personality type my help to accelerate and simplify the process of identifying your potential strengths and weaknesses as a trader.
991 comments:
«Oldest ‹Older 1 – 200 of 991 Newer› Newest»Looks like the market is factoring in a 100% chance of 25bps cut in DEC. Would love to see some updated work you did on the VIX heading in the FOMC. I thought that was really good work.
I can't say that I'm surprised. I'm an INTJ and there is a lot about trading that the type can appreciate. I wonder if an ENTx would want to sit at a PC all day? I suppose that they become the brokers and us INTx's sit at home in front of a monitor. ;)
It never ceases to amaze me the range of things I find people applying personality type to. I've been studying it a while now, but I hadn't come across its application to investing until now. But a lot of this makes sense.
I would also suggest thinking about how Enneagram applies. The 5 in Enneagram, which is what a lot of INTJs are, is even more specifically about compulsive need to know everything.
Thanks for opening my eyes to this angle on things.
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