In an interview with Market Wizards, Dr. Van K. Tharp gives a characte to a trader - a loser. A common trait of all losers is a high susceptibility to stress and an inability to defend against stress.. They have a negative outlook on life., they expect the worst, they have many conflicts with their own personality. They tend to blame others., when something goes wrong. This portrait has a foundation. If trader easy to get excited and at the same time pessimistic, he cannot effectively use his skills and abilities, does not believe in that, that he will be able to achieve success in the long term and remain in the exchange business. Despite, that there is a general idea that, who can become a successful trader, scientific work on this topic is almost unknown.
In many ways, the study of the correlation between personality and trading is similar to the study of the correlation between the test for admission to a master's degree. (GRE) and success in studying at the magistracy. Since not everyone takes the exam for admission to the master's degree, then correlation between glasses, recruited during testing and further study relatively low. But, if we had the opportunity to do research, by selecting a random group of Americans, taking the GRE test, and then compare the results of the test with their grades in training, then the test would help predict their future success. The same goes for trading.. You can take a random group in 1.000 man and give them on 50.000 Dollars, allowing to trade. Analyzing the results of their work, we would come to the conclusion, that personal characters greatly influence the successful work on the exchange. In an ideal experiment, the researcher should give each subject an equal chance of success.. However, such a perfect exploration is impossible..
Therefore, definitive research on the relationship between personality and trading success is unlikely to ever appear., however there are some studies, which clearly demonstrate, that personality traits are closely related to trading performance. A recent study by the Financial Behavior Journal stated, that a trader's personality is relevant to his trading success. Oberle chner in 2004 conducted an experiment with a group of professional traders in order to, how they see the ideal trader characteristics in the forex market. How can you guess, ideal characteristics included discipline and the ability to control emotions. This opinion differs little from that, what typical Books in trading psychology. It is important to control emotions and firmly follow the details of the developed trading plan.. However, other characteristics relevant to trading success are not always taken into account by the authors of books on the psychology of trading.. This is the ability to process information and soberly judge its relevance.. Finally, most important characteristics, those correlating with trading success may not be related to personality - this is the ability to analyze the market, identify trading opportunities, judge the current market situation and make the right decisions in the process of concluding deals.
Another groundbreaking study was sponsored by Andrew Lo, Dmitry Repin and Brett Steenbarger 2005 year. During this study, traders, who attended a seminar on online trading, was asked to take an individuality test before starting the training program. After that, scientists monitored trade, which the subjects performed, mostly on paper. They identified five main character traits, correlating with trading success, but since the reference group was small, correlation between character traits and success in trade was also insignificant.
Dug Hirschhorn c 2005 conducted an experiment on a group of practicing traders, in order to analyze the correlation of character traits and success in trading. Traits, associated with openness to gaining new experience, correlated with net profit, however far from it, as was expected. Most successful traders were less likely to acquire new experiences., i.e., as it turned out, they had less imagination and creativity, the less successful players. It seemed to me, that more successful traders are more creative and open to new experiences, than their less successful colleagues. The results of this study showed, that it is more important for a trader to be more specific and data oriented, rather than being creative.
To draw a line under the discussion about the relationship between character traits and personality remains to be. However, data from previous studies show, what undisciplined traders have, filled with emotion, there may be problems with profit. On the whole, it can be concluded, that while personality traits can play a role in trading success, just like there are many ways to it, there are also many personality types, who can achieve success as traders.
