Personality Case Study: Andrea Unger
Andrea Unger spent nearly a decade working as a middle-level manager for a major Italian corporation. Although he enjoyed putting his mechanical engineering degree (from the University of Milan) to use in the workplace, he never cherished the harsh realities of corporate management.
I had 30 people working under me, and I saw how people can be treated like numbers. The maneuvers I saw in business were sad, because you were dealing with people, and people have stories and families and lives. Top management would come in with directions to reduce here, to move people there. This is normal to meet the objectives of a company. I understand that it must be like that. But it’s not what I like.
Andrea decided to move his life in a new direction in 2001. He set his sights on a career as a market trader. He sought advice from famed Italian trader Domenico Foti and soon became a top protégé and a very good trader. In late 2004 he attended a Larry Williams Million Dollar Challenge and has been a student and colleague of my dad’s ever since.
I look at everything, but I always try to adapt it to my personal way of trading. I look for ideas that should generate new ideas following my own style. I had two important people in my learning curve. One is an Italian friend, Domenico Foti, whom I started developing strategies with early on. He is one of the best traders I know, and his support was very important—maybe not properly to teach, but rather to be a valid referral to discuss results and to gain confidence in what I was doing. The second guy is your father, Larry Williams. His job led me to become confident that it could really be done. I’m not using strategies of Larry, but I like his approach and his way to study markets. And his most important message is that there is always something new to be discovered and that we have to be ready to figure that out!
Andrea has an inquisitive mind, and he thirsts to learn and adopt the ideas of others. Yet he retains the ability to remain an independent trader and has artfully developed his own style of trading instead of just copying the moves or following the styles of others. It has paid off for him big time. His trading profits have skyrocketed, and his accomplishments and accolades have accumulated over the past decade as he established himself as one of Europe’s best traders. He won the futures trading title in the 2005 Top Trader Cup competition, sponsored by LombardReport.com. One year later Andrea published Money Management: Methods and Applications, the first Italian-language book on money management for traders. A member of Mensa, Andrea also won a month-long IW Bank “T Cup” trading contest with a 50 percent gain in that single month.
Unger fulfilled a dream and went on to worldwide acclaim in trading by winning the 2008 World Cup Championship of Futures Trading, which he captured with a very hefty 672 percent net return at the end of the year. Proving it was no fluke, he recorded a 115 percent return in 2009 to become the first back-to-back winner of the competition in nearly 20 years. But he didn’t stop there. Andrea went on to post a 240 percent return in the 2010 World Cup Championship, to pull off an unprecedented World Cup three-peat.
Andrea is a full-time trader who appreciates the complexities of the markets. “There is no easy money out there,” he says. “Markets require discipline and application to be understood. I try to develop methods that apply to the markets. I never try to apply the market to my ideas.”
When it came to Andrea’s NEO-AC results, some interesting patterns emerged. But before we get started dissecting his personality, I want to thank Andrea for allowing me to use his name, NEO results and story, because as you are about to read, it is rather personal information. (In fact, we offered all the successful traders who took the personality test anonymity in this book, and many preferred to remain nameless, for obvious reasons.) The fact that Andrea was agreeable to our making public his personality traits and how they have affected his trading is a testimony to his desire to learn more about himself and how he can be an even more accomplished trader. So, Andrea, thanks again for giving back and allowing our readers to learn from you.
Overall Andrea’s N score is quite average (78). But looking at this score by itself could be a bit deceiving and really goes to show that you have to take the full personality test, the one that breaks neuroticism down into its facets. Otherwise, one might think that Andrea is neither low nor high in emotional reactivity, when the truth is that he’s a bit of a complex personality.
Andrea scored low on the anxiety (N1) facet and the vulnerability (N6) facet. Nothing much to write home about there: That’s the pattern that we consistently saw in successful market traders. Meanwhile, on one of his neuroticism facets, N3 (depression), Andrea actually comes in quite high—and in fact his score is right on the verge of being very high. Nobody else in our group of traders had this score. Again, a high N3 facet does not mean that one is always sad or blue. It means that under certain stressful situations one is bound to feel reactive sadness more strongly than the average person. But not only did Andrea score high in N3, on the extraversion side of things, his E6 facet (positive emotions) was very low.
When I first reviewed these findings, prior to discussing them with Andrea, already certain thoughts were entering my mind. With such a personality makeup (high depression and very low positive emotions), one would have to be very careful about becoming excessively sad or gloomy in the setting of a bad move in the market. This kind of reactive sadness could easily interfere with the cognitive aspects of appropriately managing the next trade or scoping out the next turn in the market. Or depressed feelings stemming from other areas of one’s life could equally impair one’s trading. With this particular combination of traits, I would even have concerns that a spell of bad trades in the market could potentially send such an individual into a real spiral downward, and maybe even clinical depression—which would have huge consequences if not recognized early on and corrected through treatments.
When I shared with Andrea these “depressing” results of his personality profile, he was surprised at how insightful the test was. He told me that at times he does indeed experience substantial dips into sadness related to market trading. In fact, he revealed to me that he had recently been in a protracted state of relative unhappiness with his trading and that his trading results had suffered from it. He was no longer able to perform up to his old standards during this unhappy period, and this was new to him.
Digging deeper to uncover the source of his recent sadness, Andrea discovered that it set in, not because he himself was making bad trades or posting losses, but rather it occurred when other traders lost some of their moneyfollowing trading advice he had given them. You see, as Andrea gained notoriety (and deservedly so) as one of the world’s most successful futures trader, a contingent of traders (likely high in dependency) tried to follow and emulate Andrea. As we discussed in the chapter on the overly dependent trader, trying to mimic the “gurus” of market trading is a surefire way not to succeed in this business of trading. Here is what Andrea told me:
More than once I have opened positions in my own accounts that are against or contradict those that I recommend in my signal programs. That may happen due to different time frames or time horizons of the trades, or even because other systems open opposite trades on markets correlated to the signals.
Well, most often I’m happy to lose money in those positions—hoping my “followers” are happy and gaining in their positions. This is a silly attitude, as both approaches are valuable in the medium to long term. But I have the feeling that I can support my own losses and understand them better than any of my followers. I know how delicate putting money into something is, so my main concern always remains with customer satisfaction. I have not found a solution so far, unfortunately. If a student of a seminar of mine or a fellow trader following some of my signal programs loses money, I really feel sorry about it.
Feeling sorry does cause problems. My mood is bad. I may discretionarily “move from the system” that generates trades for the followers. Normally it is a mistake, I know. But that mistake comes back from time to time. I always look into the systems I use for followers trying to improve them and to solve issues related to losses. It does not reverse the feeling sorry, but it is a way to try to help.
As Andrea struggled with his emotional response to the reality of others losing real money after listening to and following his advice, it had an influence on his own trades.
What I learned from my personality profile was much more than I expected, actually. I think you described things really in depth, and I recognized myself in what you pointed out. It is interesting how you found out the sad part of me in doing things. I usually don’t care when my money is involved, but I feel the way you said when losses are harming people following me.
This point about feeling “sorry” applies not only to students of mine but also, and even more heavily so, to my newsletter followers and to my advisor program followers such as World Cup Advisor Trades. In those cases, I simply am following systems whose trades I either publish in the newsletter or I place on my accounts. My followers get trades executed as well, through auto-trade tools. Obviously these kind of followers are totally dependent on me, not because of the way I treat or educate them, but simply because of the type of service they are purchasing. The service I provides leaves little or nothing to discretionary decision making. They obviously can choose to not follow the newsletter’s indications or close the opened trades on their account—but that would probably be a silly behavior, having paid for that kind of service.
In Andrea’s case, I really can see only two potential solutions to this problem of sadness in response to followers losing money following him. Either he has to learn how to turn down requests for advice (stop being a guru or a teacher and just trade for himself—although if he likes teaching, this is not an option), or he will have to learn to not take responsibility and blame for the mistakes or failures of traders who are too dependent upon him for advice. If people choose to trace every step of Andrea’s in the markets, they do so at their own risk.
Just as Andrea became successful by blazing his own distinct trail with the guidance of several mentors and teachers, it’s important for him to realize that now that he is the teacher, he too needs to guide his students to find their own styles and their own ways of market trading. He needs to remind students not to try and duplicate what he does, but to expand on it and adapt it to their own trading strategies. Maybe he needs to find ways to incorporate more discretionary trading into the services that he currently offers.
This may take time for Andrea to really appreciate. As a very independent trader who uses mentors and teachers wisely, he may not fully grasp that some of his followers really struggle with being overly dependent—all based on their personality traits. Of course, intellectually Andrea knows these people are too dependent on him and his trading advice, but he might not really see how shackled to it they are and might not see how easy it is to fall into the trap of providing them the advice they want to hear from him.
At that point it is a self-fulfilling prophecy: By feeding them explicit trading instructions or advice that their ears want to hear, Andrea is basically setting up some of his followers for failure in the markets, which in turn will make him sad, which in turn will have an effect on his own personal trading. Of course, some of his followers will use Andrea’s services wisely and appropriately, learn to reap rewards from them, and go on to become fully independent, successful traders; some of his protégés will likely go on to become teachers themselves one day. Andrea just has to be aware that some followers will fail in trying to emulate him, and that when it happens, it is not his fault.
So it will be helpful for Andrea to fully take into consideration the dependency of others and how he may have to modify his teachings or trading advice to them. Ultimately, one way or other, I think that Andrea is going to have to incorporate into his trading advice the importance of his followers’ learning how to be more independent themselves and not relying too heavily on him for success in the markets. Likely only then will Andrea be released from the sadness that he feels when his followers lose money.
This case example is unique and specialized for Andrea and likely does not directly apply to you. However, the point is that the results for the NEO-AC test can be very telling and helpful in trying to unwrap some of the emotional aspects of your trading and how it is holding you back from trading to your fullest potential.
Moving into the realm of conscientiousness, an oddity occurs in the personality results for Andrea Unger. Recall that successful traders who are low in the C2 facet (order) are, for the most part, trading the markets with discretionary methods, while those who are high in C2 usually trade with mechanic systems. This was not the case with Andrea; he is a systems trader who is low in C2. Trying to find out how this came to be, I asked Andrea about it.
I’ve been more successful with trading systems simply because I mainly used them. I feel more comfortable using systems, because the back test gives me more confidence in the coming trades.
This statement made me ponder. One can gain confidence from looking at the historical record of a system; that’s very true. But, we also know that “past performance is no guarantee of future results.” Also, from my discussions with other top traders, one can gain confidence looking at one’s own historical record of picking winners. So does it come down to Andrea having more confidence in historical records than in his abilities? Well, it should be noted that Andrea’s self-confidence as measured on the C1 (competency) facet of the NEO-AC test is slightly on the low side. This was also somewhat of an anomaly, compared to the scores of other successful traders, who generally had slightly elevated C1 scores, indicating stronger levels of self-confidence. I think this low C1 help explains why Andrea utilizes trading systems, despite being low in C2.
Obviously we would never suggest to Andrea that he overhaul his whole trading style and abandon systems trading after all the unparalleled success he has had. Don’t fix what ain’t broke! But at least this is some food for thought—and maybe even an opportunity for Andrea to step back and reassess why and how he trades. Andrea continues,
To trade discretionary is a new challenge day after day, while using systems is more like an application of work that has already been done. The amount of stress I derive from trading (but also from any other activity) does not need additional day-by-day stress. And that’s the main reason why I use systems. Yet there are periods where I place discretionary trades and, even though the total revenue of these is certainly positive, I don’t even have precise figures about their results.
Basically I don’t like to be wrong, not because I don’t want to lose, but because losing leads me to lose confidence as well. Using systems, the examination of it is extended to a longer time scale. A losing trade in a system is normal—a drawdown, too. I can judge if it as part of the system and if it could be expected or not. Discretionary trading is sort of challenging with every single trade, and there is no performance report. This leads to a verification process after every single entry and is harder to sustain.
Another reason why I prefer systems is because they leave a certain degree of freedom during the day, as they trade automatically and don’t need my presence during the session. Yet, Jason, your response to me will not pass leaving no trace. I will consider it, and I will make up my mind if it is worth trying more discretionary trading. I just have to organize myself.
One final thought on why Andrea has gravitated to systems trading. Although low C2 was the primary trait found in successful discretionary traders, it was also common to see high scores on the O1, O2, and O3 and a low core on the A2 facet. See the chapters on my dad and Linda Raschke to read more about this. In Andrea’s case, though, Andrea scores high in O1, but low in O2, and average in O3. And on the A2 score he scores very high. My point is that he may not have the personality trait profile to really appreciate the “art and beauty” of discretionary-style trading