If you already trade, finding out what “type” (there are 15 types) of trader you are may reveal issues you are likely to face and possible solutions. If you are just starting out on your trading journey, knowing your trader type may save you some time, show you what to focus on, or may even reveal that your talents are better placed elsewhere.
Van Tharp, a psychology professor (Ph.D.) and trading coach, has been studying traders for more than 30 years. He has written a number of books on how to replicate what Super [successful] Traders do. He has also identified 15 trader types, based on his research. By answering a series of questions, a person can find out what trader type they are. Each trader type has strengths and weaknesses.
Knowing these strengths and weaknesses may help a trader improve profits by leveraging their strengths, and may also help them become aware of and/or resolve trading issues/weaknesses.
There are two personality types that are highly suited to trading. This does not mean they don’t have weaknesses! They still do, just not as many as the other types.
There are 10 personality types that may make good traders, but it will take some work to overcome some key issues. Some of these types are far more suited to trading than others.
There are 3 personality types that are likely to do poorly as traders. This doesn’t mean they can’t do it, but it will take an immense amount of work.
According to his book Super Trader (2009), if you are in the top eight types, you have a good or above-average chance of becoming a trader. The bottom seven types will find it more difficult.
The Trader Types
The following trader types have a high chance of success moving down to a decent probability of success (in descending order, with the highest probability at the top).
- Strategic trader
- Planning trader
- Detailed trader
- Administrative trader
- Facilitative trader
- Innovative trader
- Values-driven trader
- Independent trader
The following types are more likely to struggle, in descending order, with the bottom category likely having the hardest time.
- Socially responsible trader
- Spontaneous trader
- Supporting trader
- Accurate trader
- Artistic trader
- Fun-loving trader
- Adventurous trader
This test is a condensed version of Tharp’s much more robust 197 question test he uses in his consulting practice. Therefore, use this as a tool and not as a crystal ball. The test may not be accurate for everyone, as it does generalize.
If you find yourself in the top categories, that doesn’t mean you will automatically succeed. Also, if you find yourself in the bottom rungs, that doesn’t mean you can’t become a successful trader…it just may take a lot of work. And as far as I know, everyone who is a great trader works hard on their trading and on improving themselves!
The Trader Test
You can take the trader test at TharpTraderTest.com. At the end, you will be given the option to receive a free trader-type report. The report highlights your strengths and weaknesses and offers some insights on how to leverage strengths and improve the weaknesses.
The trader test is designed around three core trading qualities. The personality or trader types at the top of the list have all three core qualities. Moving down the list, the types have two, one, and none of the core qualities. The bottom types lack all three core trader qualities, which is why it will likely take these kinds of people so much more work…because they need to develop all these qualities, while those at the top already have them.
This is just one short test. It is not meant to indicate how much money you will actually make. That said, if you read through your report and are unwilling to do what it takes to overcome the issues or obstacles addressed (no matter what type you are), then trading is probably not for you. It may be best to save your money for other endeavors.
Also, this is a test for trading. It is not meant to reflect your value as a person. Everyone has strengths and weaknesses and will excel (or have the potential to excel) in different areas.
My Trader Type
There were several questions I struggled with on the test, as I could go either way. I actually did the test twice, and the second time picked the other answer to those questions. It had no effect on my result and I was a Detailed trader both times.
Upon reading my profile, it is pretty accurate. Although, I also read the Strategic and Planning trader profiles and they also seemed pretty accurate for me. You can find the profiles for other types online by typing “X trader type tharp” (or a similar variation) into Google, replacing X with the trader type you want to look up. The profiles are in PDF format.
Overall, the report pointed out a few issues that I do struggle with, and these issues have caused me to lose money (or not make as much as I could).
One of the issues is that I often assume I am smarter than my mistakes. I am aware when I am making mistakes, but sometimes dont’ care. Tharp refers to this as not recognizing mistakes. I have a tendency to ignore mistakes until it causes a drawdown, and then I go “Ok, I will fix this.” A better approach is to notice and stop the mistake before it occurs.
Over the years I have started a practice of writing down how much these mistakes cost each month. This helps control the issue somewhat. One of the articles in my trader-type report talked about tracking mistakes. It was a great reminder to stay on top of that, and possibly increase the frequency of the exercise. It also made me aware that even after 15 years of trading I still make a lot of mistakes…and that I still have work to do in that area.
Cory Mitchell, CMT