Personality Type in Trading and Investing: Examples of Unhealthy Extroversion and Introversion
Friday January 8, 2021
An understanding of personality type goes a long way. This applies in just about any field, career, or hobby you can name. And not only does understanding one’s own individual type help, but it also helps to be able to understand and interpret others’ personality types.
If you know your own type, you can use this knowledge to avoid repeating past mistakes that were caused by “you being you.” We all protect ourselves in various helpful ways by retreating into “who we are.” But that protection can also coddle us, and prevent us from making breakthroughs. This includes financial breakthroughs. With personality knowledge, you can also learn how to look for “wins” where you never knew to look before. These items are huge assets for investors or traders.
If you know others’ personality types, you can use this knowledge to interpret the information they are sharing, and even assign the information a weighting factor along a personal scale if you like. As an investor or trader, you will come across a lot of people with varying opinions, and this ability to weigh and develop a sense of scale (among others) is also a huge asset.
Some Background on Personality & Me
For a little background, I’ve been actively working with personality type for over a decade, and I’ve been professionally tested and certified in interpreting others’ personality type.
(That’s right, I took a personality type profiling test, and it was damn hard, and I’m proud that I passed it! I even profiled the test-designer’s personality type in order to interpret the design and likely answers to the test questions…a story for another time. Anyway, for the purposes of this article: I can usually read stuff people wrote, or hear things they said, and develop an idea of their personality type pretty quickly.)
Some Notes on Specific Experiences & Sources
I’ve been slowly compiling my experiences with others’ personality type in trading. So far, my main inputs are Facebook trading and investing groups, Reddit, and #fintwit, which is basically finance Twitter. I’ve also read books, taken courses, and discussed trading and investing in person with a lot of folks. This includes some of my coaching clients, who are also active traders and investors.
Please note that I won’t be recommending any specific social media profiles or accounts to follow. You can get absolutely screwed by inadvertently following and taking the advice of someone with a day-trading options account, when you meant to dip your toes into swing trading. So please be careful if you’re looking to invest, or trade crypto, or whatever.
Without further delay, below I’ve listed various examples of unhealthy extroversion and introversion. Since the point of this article is raising awareness, and since I have a lot of contingency-thinkers in the blog audience, I won’t be going into depth about the healthy side in this article. I’ve written about that quite a bit before, in various books and articles.
Quick I/E note: The examples below are based around the neo-Jungian concept of extroversion and introversion. This article is not really about the more common interpretation of those words, e.g. “enjoying/dreading time spent with others.”
E: Examples of Unhealthy Extroversion in Trading and Investing
- “See it, buy it” behavior in general (Extroverted-objective perception)
- Considering only what’s hot now, or what’s going on right now (this is in fact the dark side of “being in the moment” or what I’d call hyperbolic mindfulness)
- Wild projections about results to be gained: “$BTC to $150M by February 2022” (much more energy spent on possibilities than probabilities)
- Flashy living / talking / perceiving (live it up, demonstrate your prowess, knowledge, power; keep up with, or measure up to other folks)
- Buying or selling an asset without using a decision-making framework
- Hyperbolic emotionality. For example, I’ve seen individual traders reach out to the community, looking to find a therapist to help dampen the emotional swings from day trading. I’m glad they are reaching out, but this act by itself is screaming for a turn toward introversion and framework-design.
- Dumping on Voodoo: Criticizing others’ highly-subjective / qualitative trading frameworks, especially when they depart from group-averaged knowledge
- Too much reliance on what others think (bookmarking favorite thinkers and their frameworks, making moves that those others make)
- Too much reliance on what others feel (from individual sentiment all the way up to market sentiment)
I: Examples of Unhealthy Introversion in Trading and Investing
- Making grumpy, intuitive predictions about things that will fail. If pressed, no details or counterarguments are given. (Introverted-subjective intuitive perception)
- Engaging in criticism of newcomers, predicting what they’re doing and that it’ll fail
- Criticizing various ideas based on one’s own past experiences or relations: “Just wait, $BTC to $1,000 USD max by 2022. My friend lost all of his money trading $BTC and it was painful to watch.”
- Inadvertently following, consulting, and echoing other traders who happen to match one’s own personality type, and therefore create a subjective echo chamber feedback effect, especially with regard to type-constrained liabilities (i.e., the rest of the items on this list. Risky and happens a lot)
- Constant repetition of past maxims, many of which are now horribly broken mental models
- “You’re chasing climbers!”
- “You’re trying to catch a falling knife!”
- (See how those two oppose one another along a dichotomy, but fail to offer depth, insight, or action cues? This is not educational)
- “You can never beat the S&P 500! Should have just parked your money there.”
- (This is based on misunderstanding and over-generalization; the S&P 500 has a CAGR of something like 10%)
- Hyperactively looking for, and calling, market bubbles and market crashes (personally, knowing about this tendency helped me manage risk and trade straight through 2020 while preserving capital)
- Dogmatizing Voodoo: Insisting that one’s own framework is the best, and must be obeyed for best results
- Criticizing new-to-me things without having studied them, let alone mastered them
- Diving into investing without really diving in (stubbornly remaining who you were when you started)
- Looking for pseudo-science everywhere (For example, taking the position that technical analysis and chart patterns are like voodoo, without having really studied or applied them)
- Obsession with long-term value investing, to the exclusion of other types of investing or trading. (A Warren Buffett infatuation, for example, could illustrate this)
Reconciliation: Is it really about finding a middle ground?
It’s easy to look at this dichotomy, “I vs. E,” and conclude that it’s best to “find a balance” or to “find a middle ground.” In some cases, this is a good idea. However, I generally disagree with this takeaway as a final answer to the problem.
In my experience, it’s very helpful to watch for periods during which it would be best to employ strong introversion as a tool, even hyperbolic introversion, and the same goes for extroversion. Those periods could be extroverted in some ways, or introverted in other ways.
For example, it could be that unhealthy introversion (for example, repeating past maxims) leads to a healthy extroverted moment (an invitation from someone else to learn new stuff, which leads to learning new models), which in turn leads to healthy introversion (deepening one’s framework design). In this case you could say that doubling down on introversion is helpful. Often that’s the case, for introverts who are learning to leverage their core gifts.
Overall, these attitudes are best employed in a tool chain: Identify a problem, design a solution, deploy tools, and observe results. The A2i Loop, my answer to the OODA Loop, has really helped me with this.
This topic is hardly discussed in the world at all, so I hope my experiences can be helpful for others.
Keep in mind that every one of us is a combination of both I and E parts. So you may have experienced some, or all of these, yourself. I find it can be really helpful to identify them in others though. This seems especially true, the more emphatic the person is about a thing—be that emphatically optimistic, or emphatically grumpy.
Please don’t take any of this as specific trading advice, and remember to always protect your capital and manage risk when trading. Good luck out there!
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