Personality Type and Trading: (Part 7) by Van K. Tharp, Ph.D.
So far in our continuing series on Personality Type and Trading we have covered a lot of ground. We have examined all of the various aspects of the Myers-Briggs personality profile and elements of these profiles related to trading.
In our last leg of the discussion we will begin with the Four Temperaments.
Psychologists David Keirsey and Marilyn Bates believe that an important basis of personality are four key temperaments. Looking from a mythological stand point, these correspond to the characteristics that Zeus told his gods to help man adopt. Dionysus was to teach man joy. Epimetheus was to give man a sense of duty, while Prometheus was to give man science. And, finally, Apollo was to give man the spirit of the gods.
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Dionysian Temperament: The Dionysian Temperament occurs in those people for whom sensation (S) and Perception (P) are dominant. These SP people (ISTPs, ESTPs, ISFPs, and ESFPs) comprise about 38% of the population.
SPs tend to gravitate toward trading because they have a strong need for freedom and independence. They don’t want obligations or to be tied down in any way. The ideal life is to do what he wants to do when he wants to do it. Action is the key for these people and they tend to be impulsive. Actually, they want to be impulsive because that gives them their free spirit and sense of aliveness.
People with this type of temperament work best in crises and they even will create a crisis just to make things more interesting. You can imagine what happens when this type of behavior is brought into the trading arena.
The Myers-Brigg’s personality types for which we have little data include all four SP categories. In fact, although SPs constitute 38% of the population, they only represent about 8.3% of our sample. Why? First, I suspect that SPs do not last long as traders and those that have enough money to last for a while are not that interested in self-knowledge, just the action of being in the market. Thus, SPs will tend to gravitate toward very short-term systems in which the odds are definitely against them, but they are still willing to take their chances because that’s where the action is. In fact, the SP probably could not do well with a longer term orientation, because that would just not fit his impulsive nature.
People with SP temperaments are good with tools. Thus, I would expect them to have the potential to work well with computers and thus do fairly well in that aspect of trading.
Record how comfortable you feel with the SP temperament by picking the most appropriate number below.
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Although I do not recommend that one apply an SP temperament to trading, unless you want to forget about profits and just enjoy the action, the SP temperament is an excellent one to bring to many aspects of living. To develop more of this trait, I would suggest that you practice being much more spontaneous in what you do with your life. For example, pick one day each week in which you do everything just for the fun of doing it.
The Epimethean Temperament: The Epimethean Temperament occurs in people for whom the sensation (S) and judgement (J) qualities dominate. These SJs (ISFJs, ESFJs, ISTJs, and ESTJs) also constitute about 38% of the population. These people are dominated by a sense of duty. They exist primarily to be useful to the social units to which they belong.
Epimetheus was the husband of Pandora, who let all manner of ills escape onto mankind—old age, sickness, insanity, vice, and passion—when she opened her famous box. Yet Epimetheus, although forced to endure the result of his wife’s actions, steadfastly stood by her and remained devoted to her.
The SJ personality has a strong need to belong. But he must be the giver, not the receiver. He must earn his belongingness. As a result, I would not expect SJs to be that happy in the lonely world of trading unless they had a major social system for support (i.e., strong family support). However, the SJ might be quite content in an institutional trading situation.
However, the SJ personality is constantly seeking out what he is “supposed to do” to belong. They typically do well in school, because the rules are quite obvious. However, in the trading arena the “supposed to do” rules are not that obvious. In fact, if you ask enough people they will probably give you advice that is the exact opposite of what will produce trading success. Indeed, our sample of SJ traders produced below-average trading results. Nevertheless, the SJ usually has a very strong work ethic, which could help him overcome a lot of difficulties.
The SJ will shine in one of the ten tasks of trading—mental rehearsal. Why? The SJ is likely to envision all sorts of disasters and constantly be trying to figure out how to overcome them. Indeed, his personal motto is usually to be prepared. Unfortunately, much of his idea of being prepared involves following traditions (e.g., the “I go by the book” motto) and this also may not breed success in the marketplace.
Record how comfortable you feel with the SJ temperament by picking the most appropriate number below.
1 2 3 4 5 6 7
To develop SJ skills, develop a total disaster control plan for your trading. Think of anything and everything that could go wrong in your trading. And, if your list does not include at least 100 items, then you need to continue until you have that many. Once you have your list, then come up with three ways to either circumvent each disaster or to overcome it if it does happen.
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About the Author
Dr. Van K. Tharp is the founder and president of the Van Tharp Institute and stands out as an international leader among professional trading coaches and consultants. Helping others become the best trader or investor that they can be has been Tharp’s mission since 1982.
Tharp collected more than 5,000 successful trading profiles in a 10-year study of individual traders and investors, including many of the top traders and investors in the world. From these studies he developed a model for successful trading and investing that other people can adopt and learn. He also developed The Investment Psychology Inventory Profile to help people better understand their strengths and weaknesses in relation to trading or investing and has produced a number of home study courses.
His unique learning strategies and techniques for producing great traders are some of the most effective in the field. Over the years Tharp has helped people overcome problems in areas of system development and trading psychology and success-related issues such as self-sabotage.
Tharp, who now lives in North Carolina, received his Ph.D. in psychology from the University of Oklahoma Health Science Center in 1975. He is a certified Master Practitioner of Neuro Linguistic Programming (NLP), a Certified Master Time Line Therapist, a certified Modeler of NLP, and an Assistant Trainer of NLP.
He is the author of three books, Safe Strategies for Financial Freedom with co-authors Steve Sjuggerud and D.R. Barton, Trade Your Way to Financial Freedom, and Financial Freedom Through Electronic Day Trading.
Outside of trading, Tharp has a strong interest in spiritual studies, is an avid stamp and art collector and is a big supporter of the Green Bay Packers. He is also a movie buff, loves going to theatrical productions and shows and is a big fan of music and dancing (everything from ballroom to the disco dance floor).
He has a son, Robert, from his first marriage and has been married to Kala for 12 years. Her niece, Nanthini, from Malaysia lives with them and is like a daughter who they are putting through college.
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