By Forex Coach Abe Cofnas
In evolving into a forex trader, one of the most important components, and one of the most neglected is the traders personality. The personality of the trader shapes the strategy as well as the results. It is impossible to separate emotions from the trade. This is a fact of life, and the challenge is to recognize your own personality, limit the risks associated with your personal style, and channel the emotional energy correctly. How can this be done?
A good beginning is to recognize your own personality as it pertains to trading. There are several personality types, and the field of psychology is devoting a lot of work to modeling what emotions are. In fact, an entire new field of computation psychology and artificial chemistry is working towards mapping how emotions result in behavior. But you don't have to wait until you are at the point where two drops of greed, mixed in a base of fear, results in the predictable market reaction. There is no doubt that the resulting trade is an emotional process that is quite complicated. To get a handle on how to use emotions, profile your own personality if possible. Translated to trading you can generate several categories.
Carl Jung, one of the great contributors to the field of psy- chology, introduced the concept of archetype, categories that profile types of behavior and personality. There are many ways to characterize personality, and there is no perfect personality for trading forex. Each personality has certain advantages and disadvantages. Here are some forex trading archetypes. Which one describes you?
Archetypes in Forex Trading - Which One Are You?
The Gladiator/Samurai - This person loves to trade even more than winning or losing. For this type of trader being in the action is the objective. We call it the gladiator type because gladiators had no fear of death and focused on the battle itself. A gladiator type of forex trader has the advantage of focusing on being committed to the trade without being frenetic about the result. The disadvantage of this personality is that it can lead to overtrading and unnecessary losses. Few
gladiators survive for long.
The Warrior - Loves trading but wants to win. Avoids trades that are not highly probable and has no allegiance to any one market.
The Gunslinger/Surfer - Relies on emotional and gut feeling to enter or exit a trade. This type of personality often likes to surf and jump from one trading opportunity to another.
The Sniper - Analyzes the market, takes the trade when the market moves only on the conditions that have been have specified. This trading style is similar to swing trading or waiting for a key support or resistance to be tested. Many people do not have the patience or the wisdom to be a sniper trader.
The Lamb - This kind of trader reacts to market moves by running with the crowd. When a lot of such traders come into the market it adds fuel to the momentum of prices and creates emotional contagion. This is a very risky trading style because very often the moment that the trader perceives the crowd behavior, it is too late and the price has been exhausted.
The Black Sheep - The trading behavior of this personality is con-trarian. The trader does not join the crowd but seeks an opposite opportunity. It takes courage to be a black sheep. But often it keeps the trader in the "black" in profitability. What makes forex exciting is that any of theses personalities can result in profitable trading. The forex market provides opportunities for trades that enable each personality style to be applied.
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