1. Match Your Trading Style to Your Personality
By Ken Hodor
7/25/13

2. Presentation Motivation
Loaned book:
The Mental Edge in Trading by Jason Williams, MD
Thanks Mike

3. Overview Personality traits Psychological testing
Trader style tests by Dr. Van Tharp
NEO-AC recommended by Dr. Jason Williams
Explore various types of traders
Resources to explore your personality so you can determine your trading style

4. Trading is not Gambling
A form of art
An intellectual pursuit
Logical reasoning
Mathematical computation
Recognize patterns
Short and long term planning
Luck determines wins and losses

5. Long-term Happiness Ability to pursue autonomous goals
A sense of mastery or skill in something meaningful
Experience feelings of relatedness with other people
Note: Making money is not one of the key ingredients to long-term happiness

6. What does long-term trading happiness look like?

7. What Are Personality Traits?
Enduring
Does not change with time
Pervasive
Consistent pattern across all aspects of life
Distinctive
Easily described, assessed and understood

8. Personality tests Changes to personality
Personality does not change after early 20’s years of age.
Unless disease impairment or some other mental compromise (i.e. hit on the head)
Repeated taking personality tests does not change outcome
You ARE who you ARE…enjoy it to the max
Don’t take tests to try to sway result
Compromises results
Directs you to poor, and unfulfilling positions or techniques.
Be honest

9. Model of Personality Traits
Neuroticism
Extroversion
Openness
Agreeableness
Conscientiousness
NEO-AC is the Five-Factor Model of personality
These are further broken down into 6 facets each

10. Examples of Personality Traits Broken Down into 6 Facets Each
Neuroticism
Conscientiousness (risk taking)
N1: Anxiety
N2: Angry hostility
N3: Depression
N4: Self-consciousness
N5: Impulsivity
N6: Vulnerability
C1: Competence
C2: Order
C3: Dutifulness
C4: Achievement Striving
C5: Self-discipline
C6: Deliberation
More details are available in Dr. Williams’ book

11. Population Distribution of Personality Traits
Not good or bad
Just a matter of degree
Personality Domains such as Neuroticism, Extroversion…

12. Example: How to Work with a trait  Anxiety

13. To Reduce Anxiety Deep breathing exercises Self-hypnosis Bio-feedback
Guided imagery
Cognitive Behavioral Therapy (CBT)
Most useful and effective!

14. Change Behavior Drugs—SSRI  NOT PREFERRED!
Cognitive Behavior Therapy—CBT
Stop Sign
Hold up a stop sign when negative thought appears.
Shout it out
Shout at negative thought!
Substitute
“ I am a capable trader and am learning from my mistakes”
Sustain
Kick out unwanted thought

15. Cognitive Behavior Therapy (CBT) Process
Titration
Exposures increase from low to high gradually
Habituation
Decrease response to stimulation through repeated exposure
Greed
Anxiety …

16. Avoid setting $ Goals Leads to: Anxiety increases artificially
Disappointment
Eventual failure
Anxiety increases artificially
Thus compromising cognitive ability
Logic goes “out the window”

17. Better to Set Process Goals Such as:
Make X number of trades
But don’t over trade.
Monitor trades Y times per week
Follow system for entire month

18. Types of traders

19. Types of traders slide #1
Dependent Traders
Follow the crowd
Listen to advice about next trade
Sucked into dead-end trades
Experience anxiety over asserting themselves
Need a stamp of approval from someone else
Independent Traders
Seek advice about learning how to trade not what to trade
Take risks based on their own judgment
Work hard to learn from failures and don’t repeat them

20. Types of Traders slide #2
System Traders
Highly conscientious
Discretionary Traders
Low conscientiousness
Conscientiousness traits:
Self-efficacy
Set goals and achieve them
Orderliness
Dutifulness
Achievement—Striving
Self-discipline
Cautiousness

21. Van Tharp Trader Types Other Other Ken Other 3 others
High Potential for Success
Good Potential for success but requires some work
Other
Strategic Trader
Planning Trader
Detailed Trader
Facilitative Trader
Innovative Trader
Spontaneous Trader
Independent Trader
Administrative Trader
Values Driven Trader
Socially Responsible Trader
Accurate Trader
Adventurous Trader
Other
Ken
Potential for Success but requires lots of work or have others manage their money
Other
Supportive Trader
Artistic Trader
Fun Loving Trader
3 others

22. Case Studies of 8 Successful Traders
Larry Williams
Linda Raschke
Ralph Vince
KD Angle
Andrea Unger
Scott Ramsey
Dan Zanger
The Perfect Trader (C.M.)

23. The Ideal Trader (IMO this is for discretionary trader)
Extremely low
Anxiety Level (N1)
Vulnerability (N6)
Very high
Self-confidence (C1)
Order (C2)
Achievement striving (C4)

24. Comparison to Ideal Trader

25. What does it take to be A Successful Trader
Deep determination
Ability to adapt when needed
Mentally resilient to stressful situations
Not so important:
How educated they are
How smart (IQ)

26. Cautionary Note: Addictive Personality?
Can’t stop trading?
Others annoyed by how much I trade?
Feel guilty about trading?
Trade out of boredom?
Trade for excitement?
Trade larger $ for excitement?
Over trading?
Trading losses created problems?
Preoccupied trading outside of market hours?
Yes to at least 3 of these  seek professional help!

27. Take full advantage of your personality traits
Know your
Limitations
Vulnerabilities
Make positive adaptations
Behaviors
Expectations
Emotional responses
Find a trading style that leverages your strong traits and
plays down your limitations

28. Sayings
KD Angle (hedge fund manager) “I have no expectation of a trade”
Approach by thinking less about the money and more of a “Wait and see”
Concentrate on the art and skill of trading—not making money
Greed makes us do things—Anxiety and fear slows us down or stops us

29. Conclusion There is not an “ideal trading personality”
Match your trading style to your personality by striking the right balance between logic and emotion.

30. References The Mental Edge in Trading
by Jason Williams, MD
NEO-AC 120 question free online test:
Dr. Van Tharp
Website for books and coaching:
and Trader Test: