Continuing our series on Dr. Van K. Tharp’s trading psychological profiles, the next trader type we will discuss in this article is the Independent Forex Trader.
This type of trader has a natural tendency toward independent thinking, which is one of the most crucial characteristics of profitable traders and successful investors.
Independent traders have two of the top three core qualities of successful traders according to Tharp and his studies which puts them in a very good starting position to succeed in this game.
The Independent Trader type is a master of theoretical ideas and abstract concepts and generally values knowledge and understanding more than relationships, social interactions, and pretty much everything else.
These types of traders will usually be quiet, focused and independent. They tend to be skeptical and will normally analyze everything in-depth before taking any actions. They are preoccupied with the explanations behind all things that interest them and, therefore, will usually seek logical explanations for why certain things occurred in the market and how they occurred.
The Independent types of traders can move to creating a trading plan only after they are certain they understand everything about a specific concept (e.g. a given trading strategy). If they don’t fully understand a trading strategy or system they will disregard it regardless of how much profits it generated in past track records.
They can quickly tell if a particular trading system will fit their style or not. Because they develop a deep understanding of things, naturally they can quickly and efficiently determine whether something will work or not. This is a highly valuable skill for traders and one that gives independent traders a huge advantage.
Independent Forex Traders have the ability to constantly find new ways to trade the market. Spotting fresh trading ideas is something they can do with ease and trading them is not difficult either.
Due to their eagerness to know and understand things, independent trader types adopt this same attitude in trading which often results in them developing a deep understanding of the market and the different factors that affect it.
This is also a huge advantage and a very important trading strength that they need to leverage on to gain the maximum benefits.
The biggest challenge for the independent trader tends to be finding a balance between their work life and their social life. To be successful in their careers, all human beings generally need to balance work-related activities with social and family time.
Independent Forex Traders have a tendency to be workaholics. They can often get too caught up in their work to the point where they neglect their relationships with family and friends which can then lead to these problems transferring into their trading.
However, traders must understand and keep in mind that being preoccupied with trading too much is not very helpful in being a more profitable trader, and in fact, often it can affect it negatively more than it does positively.
The other aspect that can be a challenge for independent traders is related to one of their strengths which can sometimes be a disadvantage.
Specifically, as we discussed earlier they may reject perfectly sensible and workable trading systems just because they don’t fully understand how and why exactly the system works. Obviously, independent traders will miss out on the benefits and profits that the system generates in such situations.