A lot of traders have asked, "does my personality affect my investing skills?" The answer is yes! Your personality should affect the basic building blocks of your investing strategy.
There are so many variables to investing; often it is difficult for an individual to know where to begin. To make it easier for investors to understand personal investing type and how it affect them, Apiary Fund launched its Investor Profile.
We wanted to help traders identify their individual strengths and areas for improvement when investing or trading. Assessing a traders personality will help that trader recognize natural internal characteristics that may help or hinder their financial success.
The Effect Of Personality on Investing
There is no such thing as a 'bad profile' for an investor. However, certain characteristics of an investor's personality may affect how they respond to market changes. The key idea here is that your personality as an individual will affect the risk and emotional involvment you experience as an investor. That is why it is important to incorporate your personality into your trading strategy; sucess comes when you can identify and use your strengths and weaknesses.
Motivation, confidence, commitment, self-esteem, reasoning, and emotions are all contributors to the inner qualities influencing your ability to make investment decisions. The balance of these factors will determine your personality type, we've narrowed it down to four for you.
Four Trader Personality Types:
Fueled by their own ambition, an aggressive trader is more likely to enter a trade quickly, and respond to emotional impulses calling for an early exit when a loss appears. Despite a slightly negative connotation to the term, "aggressive;" aggressive traders have several qualities that can prove beneficial in trading, such as the ability to avoid indecision in the markets.
An intuitive trader will rely on their intuition, or a "hunch," to get in and out of trades more willingly than the other profiles. They are also more likely to enter trades quickly, and is drawn to higher risk trades because of the opportunity to make more money. Managing their personality is key to avoiding large losses.
The analytical trader is a low-risk, low-emotional trader. They don't mind taking the time to analyze every possible variable before taking action. While this may seem ideal for an investor, it is important for the analytical trader to avoid being caught with inaction.
The methodical trader is a low emotional trader, but more willing to take risks. They are likely to trade on a system, and trust it through the gains and the losses of their trades.
- Breaking The Trader Psychology
- Eight Expectations to Becoming a Successful Trader
- Trading Psychology Barrier: Fear of Risk
As you begin to identify your investing profile, you should start to ask questions about how this will affect how you trade. You may wonder what emotional triggers to watch out for, or whether or not your personality supports entering high/low risk trades. Thousands of traders with us here at the Apiary Fund have used our Investor Profile to find answers to these questions.
After getting the results of the Investor Profile, participants have the option to obtain an eBook that goes into more depth about each of the 16 possible profile personality types. The additional information includes areas such as how you view yourself, basic desires and motivations, behavior under pressure and possible areas of improvement.
As simple as a personality test sounds, understanding who you are and how you make decisions is huge when developing a trading strategy. This gives you more control when trading, and you'll find you have more confidence in your trading strategy, so grant yourself some time to really evaluate how you are allowing your personality to work for you as a trader.