Can Your Personality Prevent Foreign Exchange Trading Success
When a new trader enters the foreign exchange trading arena they are told to accept the inevitability of trading losses. By acknowledging and accepting these losses they will be less likely to feel extreme emotional swings and psychological distress.
However, what the majority of these new traders may not realise is that their personality could be the influential factor preventing their success, and not their mental approach to the trade. The reasoning behind this is that personality characteristics will affect trading strategies and styles thus impacting on trades in a fundamental way. It is important that you understand how various personality types can affect foreign exchange trading success. BEcoming successful in foreign exchange trading is as much about self analysis as market analysis.
The foreign exchange trading human variation
Human variation is the movement of individuals into different professions and activities which they find most attractive. Many individuals will gravitate towards certain opportunities that suit their personality types. If this is the case these individuals will experience more gratifying and successful careers.
However, those who are forced to enter a particular occupation may not be as successful as in their former work lives. The ineffective nature of these individuals can be contributed to by their unhappiness of being in a role that conflicts with their personality. To be successful in forex you should be suited to the activities you are going to be doing. Getting the right trading style is crucial; but for some forex will just never be a good match for them.
The significance of personality
When you are trading you will be required to complete certain mandatory tasks regardless of whether your personality is suited to the tasks or not. This will often lead to a pattern being established that allows you to either excel or fail when encountering these necessary activities.
There are two interesting simple types of personality which must be considered when looking at trading as a career. These are listed below.
1. The doers
The doers are individuals who are at peace within themselves. They are usually able to react to situations more quickly than others with the quality of this reaction often secondary to the reaction itself. These individuals often present with personality traits of restlessness and impatience and are often extremely driven. This behaviour will usually lead to mistakes within the trading market and potential emotional trades.
2. The thinkers
The thinkers are more likely to analyse the situation and take their time to react. They prefer to respond thoughtfully and behave cautiously. These individuals look at quality over speed which leads to fewer trading mistakes than doers. However, these traders are less active than a doer which potentially leads to lower profits in the long term.
Different personalities in foreign exchange trading
If you present as either a pure thinker or pure doer personality you will more than likely fail at forex trading. Pure doers will overtrade and will take unnecessary risks resulting in damaging losses. They will then engage in emotional trading in order to replete the lost capital.
Conversely, pure thinkers are more likely to freeze during trading and be inactive for long periods of time. The problem with these personality traits is that the doer is too active and the thinker is too inactive.
Should you fall into either of these extremes you should reconsider the option of forex trading as a career. It is possible to train yourself to be more balanced in your personal approach, but that does not mean you will enjoy the trading experience.