Steven Goldstein@AlphaMind101
Trading Personalities
Number 1 - The Auditors
In my work as a coach, I use a brilliant tool called the Risk Type Compass, which defines traders by 8 different Risk Personality Types.
I’ll be writing several posts on these themes over the next few weeks.
Understanding your risk personality and how it affects you in trading can reveal a lot about how you trade, where your personality can be a strengths are and how you can better leverage it, and where your personality can be a weakness of an inhibitor.
I’ve discovered many amazing insights in more than a decade using this tool in my coaching work.
For example, there is a group of types that need lots of evidence and data before acting. I use to them the accountants, but now found the term auditors to be more precise, since some accountants are happy to bend the rules, whereas auditors rarely do.
This type like to work in very a disciplined and structured way. These traders are often drawn towards systematic trading styles, where they can be straight-jacketed and not reacting (theoretically at least) to emotional signals. They’ll therefore put lots of energy building systems and testing them, working systematically or taking the systems of others in order to trade, because they prefer not to trade on whims.
The challenges for them is their threshold for evidence of a positive outcome is so high, they’ll often finding themselves distrusting (which is an emotional aspect) the system, EVEN when they built it.
A methodological approach is high amongst this group, but also at the extreme end of that comes Perfectionism and thus this leads often to Procrastination. These lot will be often paralysed by over-analyses, and stifled by the need to have analysis which can be explained in order to be trusted. Whereas feelings which can provide strong early clues as to where markets may be heading or ideas could be valid, are wholly ignored and distrusted. - This is one of the main challenges of this type.
More posts on Trading Personality to come.
There are many highly successful traders amongst all types, including the auditor type. - Those of the Auditor type that do well, tend to follow strongly systematic process (that’s their sweet spot). They l are less good on design (as they rarely have the degrees of creativity needed - unlike the architect/artist type), so they’ll often imitate or adopt, but will then adapt and improve them. - They also learn to lower their barriers on perfection and accept the inherent uncertainty of markets and that perfection is not possible, but do retain strong rules and guidelines and are often process driven, which can be very helpful of course.
