[QUIZ] Stop trading until you know your personality type …

I got a minor in psychology in college, so naturally I think I know all there is to know about human psychology… And I can cite the mental disorders of my ex-girlfriends.

Just kidding (maybe).

I am a big fan of psychology research. I have had a fascination with the human spirit since I was a child.

I didn’t study business, finance, investing or anything like that in college. My specialty was English. But I wanted to be a teacher, so I also took psychology classes.

I wanted to understand how people think so that I can talk about their needs, wants, aspirations and wants.

My favorite branch of human psychology is the still emerging science of personality research. It is one of the softest sciences in the field of psychology.

Personality is a difficult thing to measure. You can take a biological, behavioral approach… Or you can test it using data.

One of the most popular personality tests is the Myers-Briggs Personality Type Indicator. It groups individuals into one of 16 categories (each with two subcategories) based on responses to questions that measure key traits.

Today I’m going to tell you how the Myers-Briggs helped me understand who I am as an investor.

I’ll also reveal how it helped me identify a key difference between Mike and Chad…

They’re almost identical, but there’s one thing about their personality profile that sets them apart, and that difference tells you everything you need to know about their approaches to investing.

First of all, a little story …

An introduction

When I took Mike Carr’s Fundamentals of Technical Analysis at the New York Institute of Finance a few years ago, he taught me the difference between systems traders and discretionary traders.

Systems traders create precise rule-based algorithms to select trades. Discretionary traders, on the other hand, make less calculated trading decisions that tend to rely on sentiment and ‘gut’.

Systems traders think discretionary traders are fools who make instinctive and emotional decisions. Discretionary traders think of systems traders as fuddy-duddies who often fail to adapt to the market in real time.

There are also traders who focus on technical analysis (technical indicators and price charts) and others who focus on fundamental analysis (profits, sales, revenue, etc.).

Most systems traders prefer techniques and most discretionary traders prefer fundamentals… but this is not always the case.

Mike Carr is a systems trader who uses technical analysis. I am a discretionary trader who also uses technical analysis.

Neither of us cares too much about fundamentals… but we take a different approach to technical analysis.

I prefer Chad’s approach even though he’s a systems trader like Mike. As Chad likes to say on his Thursday Quick catches and Bank It or Tank It series, the price is all that matters. Chad can look at a price chart and tell you if the stock is going to go up or down.

Will he be right every time? Of course not…

While Chad is still a systems trader, his approach to technical analysis is a bit more discretionary than Mike’s. Mike would never recommend a trade based on his personal observations from a price chart, because his computer can tell him 1,001 different variables that he cannot see with the naked eye.

If you think computers are smarter than people, Mike is your man. If you love computers and people work together, you want Chad.

And if you like lucky sons of arms like me with a strong instinct, you might even want to take my advice.

The difference is in the data

I had suspected this difference for a while, so in May I asked the two gentlemen to take the Myers-Briggs type indicator.

My theory was that they would have the exact same personality type… and I was almost right.

Mike is an ISTJ. Chad is an ISTP.

What do these things mean?

“I” means “introvert”. These people tend to be calmer. They need less social interaction and tend to be bookworms.

“S” stands for detection. They have a measured approach to observing the world around them. This trait tends to be a bit… systematic. You might see where I’m going with this.

“T” means to think. It’s similar. Thinking types use reason and logic to solve problems. They are extremely objective and don’t care much about personal feelings or individual concerns.

Now here’s where they differ. Mike is a “J” which means “to judge”. Chad is a “P” which stands for “Perception”.

This last category is the most complicated, but the table below of Business intern provides an excellent explanation.

Source: Business intern

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“Judges tend to be organized and prepared, like to plan and stick to them, and are comfortable following most rules.

“Collectors prefer to keep their options open, like to be able to act spontaneously, and like to be flexible in making plans.”

This describes Mike and Chad as a “t”.

Mike is a strict discipline when it comes to the markets. He was a high ranking military officer. He excelled in the military by following orders – he succeeds in the market by following the rules.

But Chad isn’t that strict. It can tell you what a stock is likely to do next just by glancing at its price chart. And it can also tell you what a stock’s price is about to do next by looking at its trusty Profit Radar, the relative rotation graph.

They have almost identical personality types. But this trait makes all the difference. With the help of the Myers-Briggs type indicator, we can now quantify and measure this difference.

So what am I?

We have two pairs of fraternal twins (not identical) at True masters of options.

Mike and Chad are almost the same, with one difference. Mike Merson and I are actually the opposite of Mike and Chad… but similar to each other. I am INFP. It is an ENFP.

We’re also almost identical… but the opposite of Mike Carr and Chad when it comes to investing.

We are both discretionary traders. We love to break the rules and primarily use our intuition to navigate the markets.

But our main difference – the “I” and the “E” – is also very telling.

INFPs have lower energy and are very strategic. ENFPs have more stamina, so they can handle massive workloads and are willing to take the time to complete them.

I want to work smarter, not harder. Mike works hard. That doesn’t mean he’s stupid… he just doesn’t need to be so strategic with his energy, because he has more of it.

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It shows in our styles of investing. Mike publishes our Chart of the Day series and uses technical analysis and trading software to show stock trends. It is hard work, but it is thorough.

He’s also hugely plugged into the assets he’s bullish on – crypto, for example. He will spend a ton of time and energy doing research to stay on top of new opportunities in any given market.

I do as little work as possible. I don’t like to work hard unless I’m really into what I do. That is why I only focus on a few stocks and only on the trading trends that I can detect with the naked eye. I read financial news only to see how it relates to a price chart in real terms.

I earn most of my money a few months or even a few weeks a year. But I always stay in the game so I can stay connected… always thinking, always learning. I’m not afraid of doing stupid trades as long as I learn something from them.

What type of investor are you?

There is a free version of the comprehensive Myers-Briggs test at www.16personalities.com. He will explain everything about your personality type to you.

You can use this information to determine a number of things – from political affiliations, to mental disorders that your “guy” might tend to struggle with, to what kind of friend and spouse you are most naturally.

Now you can also use it to determine what type of investor you are.

The results should tell you if you are more disciplined and rules oriented… or if you are more spontaneous and free.

The biggest secret to success in the markets? To know itself. This will help you get there.

Ciao,

Chris Cimorelli
Editor-in-chief, True masters of options

Card of the day:
What’s the next step for oil?

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West Texas Intermediate crude oil is now at its highest level in over six years …

Tell that to someone who has been there for negative oil prices in 2020, and they would probably make you laugh from the room.

But now the question becomes… Is oil revisiting its old highs from the early twenties? Or is it correcting back to its newer lineup?

On a purely technical basis – we can never ignore OPEC shenanigans – I think oil is going down, at least in the short term.

Note the divergence of the MACD and RSI momentum indicators. As the price of oil has hit new highs, both of these indicators point to slowing momentum.

Note that this is a weekly chart of oil – best for spotting medium term trends. So if you are bullish on oil stocks, you will probably have a better chance of recovering some in the weeks and months to come.

Better,

Mike Merson
Editor-in-chief, True masters of options


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