What type of trader are you? Take our quiz.
People have been engaged in some form of trading for centuries if not millennia and over time different styles of trading have evolved around the world. In the modern world of trading the financial markets – before and after the onset of internet trading, a host of different methods have evolved. Some trade on short time frames taking advantage of economic announcements, others trade on the trends based on market sentiment, fundamental traders focus on the strength of a specific asset (currency or company stock), technical traders look to past price action for cues to future price movements, arbitrage traders buy and sell the same or similar asset simultaneously looking to profit in the differences across markets. There are day traders, position traders, scalpers and swing traders. As you can see the list is long.
Different people will swear black and blue about the accuracy of one style of trading over others. However, one of the reasons people fail in the markets is that they haven’t identified what kind of trading suits their mentality. So we’ve put together a short, fun test to see what type of trading might suit your psychology better. Keep in mind, the quiz is to give you some food for thought and help you understand your personality and the kind of trading methods that may be best for you – it is in no way an indication into your emotional or mental well-being.
Go through each of the questions below and choose which of the 2 phrases fits you best. There is no right or wrong answer and don’t spend too much time on each question – answer quickly and intuitively.
- You arrive for your appointment
a – Early or on time
b – A little late – they will probably be late also.
2. You are driving and someone cuts you off
a – You yell and gesture at them out the window
b – You stay cool and give them the benefit of the doubt.
3. When ordering a meal at a restaurant
a – You always choose the same kind of dish
b – You always want to try something different.
4. When completing a task you are more focused on
a – Getting it completely right even if it means going over time
b – Getting it mostly right but on time.
5. When you fail at a task do you
a – Worry about it for days thinking how you could have fixed it
b – Take the fail in your stride and focus on the next task.
6. Your next car is a
a – Volkswagen golf – reliable, comfortable
b – Mazda MX-5 – fast, performance.
7. Your next diet or exercise routine
a – is already underway
b – starts tomorrow.
8. When you don’t get your way
a – It makes you sad or angry
b – It makes you philosophical.
9. You prefer to spend your weekend
a – You prefer to spend your weekend
b – Peacefully around the house
10. When completing a task you prefer to
a – Be methodical and do things in order
b – Sit back and approach it from different directions.
11. If you were a boat in a picture
a – You would be on a stormy sea
b – You would be on a calm sea.
12. If you were to apply for a new job would you look for
a – A stable environment with good pay, benefits and longevity
b – A start up with potential for a lot of money but also the risk of folding.
13. Do you get enough rest and exercise?
a – Yes
b – Too busy.
14. When making decisions you often use
a – Your gut
b – Your head.
15. You’ve been wrongly accused of something minor
a – you confront your accuser
b – you leave it be, it was minor after all.
What your answers mean:
Questions 1, 4, 7, 10 and 13 – if you answered mostly ‘a’ in these questions then your personality traits leans towards being thorough and careful. You like to do a job well in an organized and efficient manner. As a trader you exhibit self-control and vigilance. Your ideal trading methods are mechanical, structured and detailed – you are likely to trade more often risking smaller amounts. If most of your answers here are ‘b’ then you are more easy-going and prefer to see the big picture rather than fine detail. The type of trading style ‘a’ uses would frustrate you and ultimately work against you. You trade less but taking larger risks per trade.
Questions 2, 5, 8, 11 and 14 – if you answered mostly ‘a’ to these questions then you tend towards emotions of fear, anger, worry and frustration. When you trade and win you become overconfident and when you lose you begin to self-doubt and hesitate. Being emotionally sensitive can be a plus in sensing price action as you are more open to subtle cues from the markets. An emotional trader should be cautious of not trading a lot as it becomes too much for them. If you answered mostly ‘b’ then you are more philosophical about your losses and don’t internalize them blaming yourself – sometimes the markets just move against you even with the best-laid plans. You are even-keeled and can turn around losses as they are not tied to your self-esteem.
Questions 3, 6, 9, 12 and 15 – if you answered mostly ‘a’ to these questions then you tend to be a creature of habit. You know what you like and are good at and you don’t go far outside your boundaries. You like your stability, comforts and familiar surroundings. You are a careful trader who uses good risk management policies, placing your stop and profit orders. You do better trading smaller time frames. If you answered mostly ‘b’ then you like a faster life, are more adventurous and prefer the exotic to the known. You seek risk and enjoy the challenge of trading larger time frames. You can be a bit impulsive when entering the markets and are frustrated when there’s not much action or volatility. The ‘a’ trader is risk averse and might even cut profits short to avoid reversals. They are best served trading smaller volumes in non-volatile markets or times. While ‘b’ would be frustrated by illiquid markets and be open to making impulsive mistakes.
Ultimately you are not just one of the above traits but a combination of them. Some combinations are not as suited to trading as others. For example a person who has low discipline and low organizational skills combined with high emotion tend to trade impulsively somewhat like gamblers. A risk averse trader who is also high in emotion is motivated by fear rather than gain and can also make bad decisions. Some of the better traders tend to be risk-tolerant, have low emotion and are structured and follow the rules – they trade with their heads.
I hope the quiz has given you some things to think about. Remember, you are a complex being and not so easily boxed as one simple test might do. Think about your personality style and think about your trading methods – do they match or are you battling against a system that ultimately doesn’t suit you?