One often hears the advice to “trade according to your personality,” but most personality models are useless when it comes to trading.
In my work with top traders I’ve developed a model consisting of 5 Trader “Types” that helps traders understand themselves. Once you see how your own personality affects every single decision you make, you can begin to account for your natural biases.
This is part three of a five-part series on the Five Trader Personality Types. At the end of the series you will be able to take a free self-test to determine your type. The acronym I’ve developed is AWARE.* The first letter ‘A’ stands for Agrarian (Farmer). The ‘W’ is for Warrior, and this week we are on to the next letter… the next ‘A’.
‘A’ Is For ‘Artist’
Markets are fascinating for Artists. Being right-brain dominant, Artists constantly seek to identify interesting and meaningful patterns in market behavior. They like novelty, so they explore (and may collect) numerous trading systems, methods and/or indicators. Being compulsively creative, they often seek to create a hybrid system consisting of gems gleaned from countless explorations.
Artists are possibility people. They get motivation from the potential gains they see just around the corner. Unfortunately, Artists also over-rely on intuition and have a tenuous relationship with their trading rules. It is less important for them to follow their rules and instead they seek a sense of attunement with the flow of the market in the here and now.
Psychological Challenges For Artists
Artists enter a state of “flow” very easily, which can often lead to a trading trance. At that point, trading becomes its own reward and that’s dangerous territory. Artists are not arrogant, but they may frequently lose touch with reality because possibilities seem so real to them.
Artists also tend to have very strong impulses to act when their intuition is speaking. They become convinced they “know” what the market is about to do next and they act on those convictions without waiting for any confirmation. Improvisation thereby becomes the rule, not the exception.
Lastly, because Artists rely heavily on creativity, they can change their trading method like their clothes, but a Jack of all Trades tends to master none… and therefore pure Artists tend to underperform the other Four Types.
*The AWARE model is copyright by Dr. Kenneth Reid. All rights reserved. Daytradingpsychology.com
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[Which type do you think you are? Post a comment below.]
