Imagine there were a way to assess and measure your innate personality traits . . . with incredible detail and scientific validity. Then imagine there were a body of research data that could help you make sense of your specific personality traits . . . and better yet, teach you how to apply your own cluster of personality traits to become a better, wiser, and more consistently profitable market trader.
Well, there is. And I want to tell you about it!
My name is Jason Williams. I am a medical doctor and adult psychiatrist who trained at what is often considered the nation’s (if not the world’s) preeminent hospital and medical center: Johns Hopkins, in Baltimore, Maryland. I am also the son of Larry Williams, whom many consider to be one of the world’s most eminent futures/commodities traders. (He is also a pretty good dad.)
For some time, my father and I have mused over, discussed, and debated how human emotions and the personality traits behind them relate to someone becoming a successful, or unsuccessful, market speculator. It is one of our favorite topics of conversation, and given our respective backgrounds, it probably makes sense that this particular fascination moved us to learn more and then write a book about it.
Not only did we dig deeply into the scientific literature on this subject, but we also started compiling some data of our own! Starting in 2010, we began giving a standardized personality test (the NEO PI-R) to a group of hand-picked, top-notch market traders (all people personally known to be very active traders and to have successfully traded the markets with consistency, year after year, many even for decades). We then discussed their results with them individually, to get a deeper appreciation of what makes a great trader. This book contains our findings.
Rest assured, this is not some pie-in-the-sky, nonsensical psychobabble or flim-flam that can’t hold water. Nor is it your run-of-the-mill motivational self-help material written by people who need even more help than you do! Nor is it some brief and diluted personality quiz (and trust me, those are out there on the Internet, and they’re worth exactly what they cost . . . zilch) that leaves you with only vague generalizations and nothing new or concrete to approach the markets with.
Rather, the book in your hands is something much more valuable and much more real. All of the principals contained within these pages are based on hard science and our current understanding of the human brain and mental life (psychology). As far as we are aware, this is the first treatise that seriously and in great depth explores the link between successful trading and personality traits.
Look, it’s no great secret that managing one’s emotions is huge when it comes to surviving the turbulent ups and downs of the markets. It can be a pretty wild ride, and all along the way we are each emotionally moved by, and respond to the markets’ activity, based on who we are as unique individuals. If you deny that your emotions are just as vital as your favorite trading system or market indicator, you are either in a state of denial or merely a “paper trader.”
The reality is that classical finance theory, as taught in universities, does not take into account the raw human emotions involved in decision making. Classical finance assumes that we all act as rational beings, when in fact we all know that we don’t. The decisions of investors and traders are shaped by not only sound logic, but also by emotions within a personal life context. We are unavoidably prone to such psychological biases when it comes to trading the markets. Understanding our own personalities and temperaments, and even more so how they shape our financial decision making, is a fundamentally crucial task for any investors hoping to achieve good returns. It can be quite daunting to think about how the numerous personality and emotional variables can interfere with implementing and sticking to your trading strategy. This book sets out in a very systematic way how to approach your personality and its influence on your trading, and how to master them.
There is no mistaking it: our emotions are real. After all, this is real money. Real contracts for commodities, stocks, bonds, and currencies are on the line. Learning to understand and adapt to your emotional strengths and weaknesses is just as critical as any other aspect of your trading. Even the most seasoned traders still grapple with the emotional component of trading. One major hypothesis is that the successful trader has learned, one way or another, to adapt to his or her own blend of personality traits and, over time, has learned to conquer the emotional aspects of trading because of this healthy adaptation. We should all learn from these master traders!
The best way to read this book is to first go through it cover to cover, and then refer back to each section as needed during particular market conditions or personal contemplations. Although the real “meat and potatoes” of how personality relates to traders starts in Chapter 15, it really will be helpful to read the first 14 chapters on personality and the human mental life, in order to get a good, solid foundation under your feet. Also, as you read this book, pay special attention to the mental edge tips listed at the end of each chapter, as it is into these that we have distilled the most critical concepts! Finally, it is imperative that at some point you take the NEO PI-R, in order to measure your own personality traits and see how you stack up against the world at large and against the top traders in the world. By doing so, you will be well on the road to knowing how to adapt your own personality to prosperous trading. This test can be administered by any accredited psychologist or psychiatrist who is trained in giving, scoring, and interpreting it.
Our ultimate hope is that this treasure trove of knowledge will help you better understand yourself, how you currently trade, and how you can learn to trade more effectively. We would love to hear your comments!
Jason Williams, MD
emaildoctorj@yahoo.com