A Sample Profile Analysis

(Each analysis varies based on your individual responses to the test. This is just one example.)

Dear Mr. Doe,

 

Congratulations on completing the Investment Psychology Inventory. The following profile gives a current measure of your strengths and weaknesses as a trader/investor. The scores are not etched in stone. Thus, even if you rank in the bottom 10 percent, there is hope. The scores are designed to enable me to give you the best advice possible and to guide you in working through my home study course. Good luck on your journey.

 

Your personality type suggests that you are highly confident, which is great for a trader as long as you have developed a workable business approach. In general, you live much of your life in an introspective reality, focusing on possibilities. You use strong empirical logic in your thinking and prefer events and people that have positive uses for you. You tend to look to the future and be a builder of systems and theoretical models. For example, you have no trouble thinking of reality as something that is made up and, thus, is quite malleable. No idea is too far fetched to be entertained. You probably are a natural brainstormer and are always seeking new ideas.

Once you have built a system, decisions tend to come easily. You tend to conform to rules you find useful and that make sense rather than those that are mandated. You love to manipulate the world of markets and strategies, always seeking strategies and tactics that have a high payoff. You only need logical explanations because you have a keen eye for the consequence of the applications of new ideas. You tend to use your intuition to grasp the whole picture.

You have a drive to complete trades and are constantly thinking about long-term consequences. You love challenges because you know you can overcome them.

Your profile is excellent for a trader, and only about one percent of the general population has it. Your primary weakness is that you may be vulnerable emotionally.

 

Stress is a major cause of market losses. An exception is the small number of traders who have developed unconscious competence at trading, and even they are subject to burnout. Stress restricts how we process information. Under stress, we tend to narrow the number of alternative possibilities we will consider. In fact, most people continue to do what they are already doing, only putting more energy into tasks. Thus, you can imagine how stress can severely impair your ability to function well as an investor. For example, most stressed investors tend to hang onto losses. They act as if they are "married" to certain investments, failing to consider others.

 

You will notice on your profile sheet that I monitor three major investment-related causes of stress: 1) Psychological characteristics; 2) Factors influencing decisions; and 3) Management and discipline factors.

 

Your profile indicates that you invest for reasons other than to make money (MT = 40). This is not a serious problem by itself; many good traders have high MT scores. However, it becomes more serious when combined with a high PC and/or high SF score. Your PC score of 40 and SF score of 29.17 are high. (A list of what these score abbrevations mean are at the bottom of this page.)

 

Your PC score of 40 suggests that you may experience conflicts that make it difficult for you to win in the market. You may dedicate a part of yourself to carrying out a positive intention. For example, some traders have trouble with elements designed to protect them (because it stops them from doing anything). Once you accomplish what you intended, you may ignore the feedback. As a result, you continue to carry out the positive intention. Your behaviors, while satisfying the intention, are not necessarily in your best interest as an investor. For example, I noticed that you believe you need to "sacrifice" yourself to get ahead and, thus, may be exhibiting "self-sacrificing" behaviors. To understand this better, I suggest you study Volume 3 of the course.

 

Your SF score suggests that you get an urge to trade just because the market exists and it "feels good" to participate. Take the compulsive trader test in Volume 4 of the course and follow the guidelines appropriate for your score.

In addition, I would strongly suggest that you suspend trading until you develop a complete game plan (see Volume 5) that helps you to control your need for action.

 

Your TK score could be a serious problem. It suggests three possibilities. First, you may not have a trading system. Second, you may have a trading system that you don't really understand. Third, you may have a very unusual trading system. You probably know which of these possibilities best applies to you.

 

Your CF score of 40 indicates that you have a tendency to follow the crowd, especially under high-stress conditions. This is a major reason for investment losses. I suggest you trade alone and avoid watching CNBC or anything similar.

 

Your OZ score of 50 indicates that you need to become more organized in your approach to the markets. For example, I suggest that you write down your trading rules and keep a diary of your trades. I strongly suggest that you develop a game plan for your trading using the guidelines given in the last chapter of the course.

 

Your overall profile was excellent. However, you were a bit defensive when you completed the inventory (as if you were being graded, and it was essential to get an A). As a result, many of your scores may be lower than they should have been, preventing me from giving you the kind of advice I would like to in response to such a profile.

 

By completing this inventory, you have indicated that you are more aware of what is important to successful trading than the average person. I hope this profile helps you and that you will continue to take steps to improve yourself.


Sincerely,



Van K. Tharp, Ph.D.

 

 

Profile Summary

 

This inventory is designed so that low scores (e.g., below 30) tend to predict investment success. Unique situations and misinterpretations of certain questions may contribute to high scores. Those scales with which you should be concerned are discussed in your profile letter.

 

Psychological Characteristics

Score Attribute Description
16.67 WR A low WR score indicates that your personal life does not interfere with your trading success.
0.00 PA A low PA score indicates that your attitude supports your trading activities.
40.00 MT A low MT score indicates that you trade primarily to make money, whereas a high MT score suggests that you trade for other reasons.
40.00 PC A low PC score suggests that you have few conflicts with your trading activity. This is a very positive indicator.
20.00 RS A low RS score indicates that you assume full responsibility for your trading results even if you obtain advice from others.
23.33 Section Average

 

Decision Making Skills

Score Attribute Description
57.14 TK A low TK score indicates that you use a trading system and/or have a sound knowledge of trading fundamentals.
16.67 JH A low JH score suggests that you make sound decisions and have few biases in your decision making processes.
40.00 CF A low CF score indicates that you are an independent thinker. You make your decisions without worrying about what others are doing.
37.94 Section Average

 

Management And Discipline

Score Attribute Description
37.50 IN A low IN score suggests that you are quite intuitive with respect to the market (Here low means 50 or less).
50.00 OZ A low OZ score indicates that you manage your money well and that you are very organized.
29.17 SF A low SF score indicates that you are very disciplined and patient in your approach to the markets.
38.89 Section Average

 

You will use these categories in the Peak Performance Home Study Course

 

WR Score

WR stands for Well Rounded. It indicates to what extent your personal life may interfere with your financial well being. Your score is composed of both stressors in your life and your stress protection. If you have a score over 30, then you should immediately proceed to the stress test to determine areas in which you specifically need to work. Volume 2 of the Peak Performance Home Study Course is a complete stress management course, so a high WR score indicates that you need to direct your attention to that portion of the course.

PA Score

PA stands for Positive Attitude. It indicates the degree to which your expectations may interfere with your trading. If your score is 30 or more, I would suggest that you review the belief sections given in Volume 3 of the Peak Performance Home Study Course and work on adopting those beliefs. They will change your trading and your life.

MT Score

MT stands for Motivation. Your MT score indicates the extent to which you are motivated to invest or trade for reasons other than to make money. Most top traders will have high MT scores, so we only consider an MT score to be significant if it is combined with either a high PC score or a high SF score.

PC Score

PC stands for Prosperity Conflict. A high PC score indicates that you have a lot of conflicts that may detract from your ability to make money in the market. Conflict is discussed extensively in Volume 3 of the course.

RS Score

RS stands for Respondability. Respondability is discussed throughout the Peak Performance Home Study Course. If your score is above 30, then you may be playing the victim role. We have also found that people who are interested in working on themselves (i.e., who take the course) seldom have RS scores above 40.

TK Score

TK stands for Technical Knowledge. A high TK score indicates that you probably need to work on developing a better trading system, although it may also mean that your system is a little unusual. If you have a high TK score, be certain that you complete Volume 5 of the course.

JH Score

JH stands for Judgmental Heuristics. A high JH score indicates that you have many of the biases in your decision making that are discussed in Volume 5. Review that material in detail.

CF Score

CF stands for Conformity. A high CF score suggests that you tend to be a crowd follower. This occurs in certain personality types such as those people with a high need to be liked. It also tends to occur under high stress conditions. If you have a high CF score, then you should work on Volume 5 and possibly Volume 2.

IN Score

IN stands for Intuition. This scale is a little different from any of the others. If your IN score is below 75, then you are more intuitive than the average person taking the inventory. If it is 50 or below, then you are very intuitive. Your game plan, (see the last chapter of Volume 5), should take into account your intuitive abilities. However, you should be certain that your intuition is not just an excuse ("into wishing") for laziness, and that you really do make good intuitive decisions.

OZ Score

OZ stands for Organization. A high OZ score suggests that you need to work on becoming better organized in your approach to the markets. If you have a high OZ score, a high TK score, and a low IN score, then emphasis on system development and organization should be a high priority for you. A high OZ score also may suggest that money management is a problem for you. Money management is covered in this volume and Volume 5 of the Peak Performance Home Study Course.

SF Score

SF stands for Speculative Fever. A high SF score indicates that you have a tendency to be a gambler. If your SF score is high, then you should immediately take the compulsive gambler test in Volume 4 of the Peak Performance Home Study Course.

If you miss 12 or more questions in that test, then it's time to stop trading. Do not trade until you've developed a complete game plan in which you resolve to only take low risk trades. In addition, prior to resuming activity in the market, deal with the part of you that needs "action." That part of you, unless you follow this advice, will probably cost you thousands of dollars.

 

Learn More About the Test....

 

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