Few people have delved quite so deeply into the psyche of the trader as Dr Van K Tharp. Armed with a PhD in psychology, Tharp decided to research his own failures in the market, based on a suspicion that these formative losing experiences might have had as much or more to do with his own psychological make-up as they did with the markets themselves.
This research led to an extensive test named the Investment Psychology Inventory Profile and the profiling of thousands of individual traders.
The Tharp Trader Test is a truncated version consisting of 35 questions (the parent profile questionnaire features 176 questions based around ten different areas). It’s free to take online at tharptradertest.com but does not claim to be exhaustive.
As the site says: “With only 35 questions, the Tharp Trader Test is not an exact science and some people may find that their answers place them on a borderline between two different types of traders.”
It does however aim to provide a snapshot of your personality as it relates to being a trader. Each type has “its own temperament, personality, perception and interpretation that ultimately affect how the market is approached and traded”. Results of the test are not supposed to prescribe the kind of trading you should be doing, or even to inform your choices of markets and timeframes. They can, however, provide an insight into your own individual strengths and areas you find more challenging. These alone could be enough to allow you to improve your trading successes.
The 15 trader types identified by Dr Tharp are:
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
Desirable traits for successful traders include the ability to see the big picture, connecting threads and recognising opportunities. A successful trader should also base their trading decisions on logic, be decisive, systematic and able to plan and carry out their actions in a sensible and consistent sequence.
The Strategic Trader and the Planning Trader are the only two types that possess all the desirable traits for a successful trader, but that doesn’t mean that other types cannot play the forex or stock markets successfully. A further ten trader types have beneficial traits in some areas and require work in others. As in most areas of life, the chances of success can be markedly improved by self-awareness; identifying your own weaknesses and taking measures to improve them.
The Artistic Trader, the Fun Loving Trader and the Supportive Trader are identified as having the least chance of success. Again, however, this does not mean they cannot be successful; it just means that it may take a lot of hard work and an adjustment of habits, behaviours and attitudes.
Interested how to learn to trade on the Forex market? Register for one of our free 2-hour seminars in the UK. Click here to find a forex seminar near you.