Dr. Van K. Tharp is a professional psychologist and trader coach who has come up with a very interesting set of trader personality types that novice forex traders can use to help assess their psychological suitability for the forex trading arena.
Each of the fifteen trader types identified by Dr. Tharp conforms to a certain trading psychology profile. The characteristics, strengths and weaknesses of each of these profiles are discussed in greater detail by Dr. Tharp in his writing on the subject, as well as on his website.
The Trader Personality Types
Dr. Tharp's trader personality profiles include the following fifteen general types:
- The Accurate Trader
- The Administrative Trader
- The Artistic Trader
- The Adventurous Trader
- The Detailed Trader
- The Facilitative Trader
- The Fun Loving Trader
- The Independent Trader
- The Innovative trader
- The Planning Trader
- The Socially Responsible Trader
- The Spontaneous Trader
- The Strategic Trader
- The Supportive Trader
- The Values Driven Trader
Dr. Tharp offers a free trader personality test assessment on his website that you can take to find out what type of trader personality group you tend to fall into.
Characteristics of a Successful Trader
Dr. Tharp has identified three primary psychological elements which all of the great traders he observed tend to share. These desirable traits for traders consist of the following characteristics:
1. Being able to grasp the big picture, to connect events and to identify trading opportunities.
2. Being able to use logic and analysis to base trading decisions on.
3. Being orderly, decisive and able to operate sequentially.
Personality Types Best Suited for Trading
Only two trader personality types have all of the desirable characteristics of a successful trader. These are the Strategic Trader and the Planning Trader.
Traders that fall into these personality types have the best probability of success as traders. Not only do they tend to have the greatest financial success when trading, but they also have what it takes to operate profitably under a variety of market trading conditions due to their mental flexibility.
Personality Types That Achieve Success With Some Work
A larger group of ten trader personality types have one or two of the desirable personality characteristics of a successful trader.
These ten moderately successful trader types are: the Detailed Trader, the Facilitative Trader, the Innovative Trader, the Spontaneous Trader, the Independent Trader, the Administrative Trader, the Values Driven Trader, the Socially Responsible Trader, the Accurate Trader and the Adventurous Trader.
These traders would do well to work on developing the trait or traits which they lack out of the three listed above that are shared by successful traders.
With some self observation - and after performing appropriate work on their behavioral responses as traders - they can also usually become successful traders like the Planning and Strategic Traders.
Personality Types That Find Successful Trading Especially Challenging
At the bottom of the trading potential totem pole Dr. Tharp has found three trader personality types that are unsuitable to trading forex for a variety of reasons, but largely because they lack any of the aforementioned characteristics of successful traders. These consist of the Artistic Trader, the Fun Loving Trader and the Supportive Trader.
Individuals that fall into this group are somewhat challenged by trading and will often find trading successfully to be very hard work. These traders may do better as investors by lending their money to others to trade forex for them.
Nevertheless, a possibility of success exists for such challenged traders if they are able to adjust their habits toward those of successful traders. They can attempt to do this based on regular feedback, self observation and adjustment, but they will need to be committed to pursuing their goal of trading successfully with considerable persistence.