Thursday, June 28, 2007

Assessing Your Personal Strengths: What They Mean For Trading

A common perspective is that traders run into problems because of personal (or personality) flaws. My experience with successful traders in professional settings, however, finds that the successful traders often have as many of those shortcomings as other traders. The difference lies in their personal strengths--and how they bring these to bear in their trading.

It's only been fairly recently--with the rise of "positive psychology"--that research has taken a hard look at strengths and subjective well-being. One excellent compilation of this research is the large text "Character Strengths and Virtues" by Christopher Peterson and Martin E. P. Seligman. It is an attempt to pull together everything we know about such qualities as wisdom, courage, love, kindness, justice, leadership, modesty, optimism, spirituality, and much more.

Another effort to study strengths are the Values in Action questionnaires that evaluate 24 positive personal qualities. (Interested readers can register on the research site and take the questionnaires for themselves).

My experience is that many trading problems occur, not because of traders' weaknesses, but because their strengths do not align properly with their trading. In an upcoming post, I will update the Trading Coach project and illustrate this concept. Interestingly, very few trading coaches/psychologists seem to spend a great deal of time assessing specific trading and personal strengths. The assumption seems to be that, if you address a weakness, you'll then succeed.

The opposite approach is that, if you build strengths, you can work around your shortcomings.

Let's try a little exercise. Below is a list of strengths from the VIA survey. Identify what you consider to be your five greatest strengths from this list and jot them down:

creativity, curiosity, open-mindedness, love of learning, wisdom, bravery, persistence, integrity, vitality, love, kindness, social intelligence, citizenship, fairness, leadership, forgiveness, modesty, prudence, self-control, appreciation of beauty, gratitude, optimism, humor, spirituality

Once you've written down what you believe to be your five greatest strengths, now--next to each of these strengths--write down how you specifically employ that strength in your day to day trading.

What I find is that, sometimes, how a trader is trading does not make concrete use of his or her greatest strengths. As a result, the trader is pulled two ways: toward what he or she "should" do according to the chosen trading style and toward what comes most naturally as a personal interest and strength. This is not a problem with discipline per se; it is a problem of a lack of fit between trading approach and personal competencies.

It is not necessary for trading to actively engage all your strengths. If many of your top strengths are not regularly utilized in your trading, however, two consequences are likely to result: a) you will not be as successful as you could otherwise be; and b) you will likely find trading less than fully satisfying and will not sustain the motivation to develop yourself fully.

In our Trading Coach project, Trader C. is running into some difficulties that have reduced his profitability. As we shall shortly see, it is his strengths that are getting in his way. In an upcoming post, I'll show what we're doing to remedy that situation.


Subjective Well-Being: Why It's Important For Traders

Three Steps Toward Improving Your Well-Being

Understanding Lapses in Trading Discipline

Top Ten Reasons Traders Lose Their Discipline


nicker said...

Dr Brett

Selecting a top 5 from the list seemed impossible, not only because of difficulty in ranking the characteristics, but because many of the words were subcategories of other categories.

For example

Love includes - spirituality, gratitude, kindness, integrity, citizenship, forgiveness, modesty, appreciation of beauty, vitality

Integrity includes - bravery, leadership, self-control, fairness, persistence, vitality

Wisdom includes- openmindedness, optimism, creativity, curiosity, love of learning, love, social intelligence, humor, integrity

and there are other groupings. I guess the grouping is the province of psychologists. But my top five strengths selected by the VIA inventory were not in the order of strengths I selected from your list. So, I reckon there's value in seeing ourselves as others see us, especially for eye-openers. Yet we know ourselves best.

Thanks so much for your work to help us build on our strengths!


BB said...

This is a tough one, and encourages maturity, self-knowledge beyond the PnL spreadsheet...and then acceptance of this knowledge and application of this knowledge. Good to bring it up.

Brett Steenbarger, Ph.D. said...

Hi Nicker,

Thanks for the comment. I agree: there are many different ways to frame these strengths. The key, I believe, is whether or not they are actively utilized in one's trading. It's not so unusual, I find, for traders to pursue trading, even though trading may not be where their strengths lie.


Brett Steenbarger, Ph.D. said...

Hi BB,

I agree; that maturity and self knowledge is very helpful in drawing on strengths to get us through the inevitable lean periods.


MagickMystik said...

According to VIA inventory of strengths survey, do you think that "Prudence: Being careful about one’s choices; not taking undue risks; not saying or doing things that might later be regretted." and "Self-regulation (self-control): Regulating what one feels and does; being disciplined; controlling one’s appetites and emotions." are the two most common qualities that most trading books talks about, that traders should have?
What happens if one lack such qualities? or not on one's top 5 strengths? (or even in the bottom 5)

Brett Steenbarger, Ph.D. said...

Hi Magick,

I don't think it necessarily means that prudence (and related traits) are weaknesses if they're not top 5 strengths. It's when self-control is actually a weak area--which is often seen in other facets of life--that trading becomes impaired. We see that most notably among traders with addictive personalities, attention deficits, etc.