The MTRI Neuroticism Dimension in Trading: How Emotional Reactivity Shapes Decisions
Understanding the MTRI Neuroticism Dimension
The MTRI Neuroticism Dimension measures how prone a trader is to negative emotions
such as anxiety, regret, and self-doubt. Neuroticism doesn’t determine whether someone will succeed
or fail, but it reveals how they are likely to respond when trades don’t go as planned.
There is a lot of research on the role of neuroticism in investment decision-making. Forbes published a great overview some time ago. You can read it by clicking here.
By examining real-world examples, we can see how traders at different levels of neuroticism react
to the same losing trade in Tesla (TSLA).
Mike (High Neuroticism): The Emotional Spiral
- In the trade: When TSLA turns against him, he feels panic, anger, and shame. His inner voice is harsh: “I always mess this up.”
- Behavior: He may exit too early, flip his position impulsively, or revenge trade to win back losses.
- After the trade: Mike replays the mistake endlessly. His confidence erodes, and he either avoids good setups out of fear or overcompensates by trading recklessly.
For traders like Mike, a single losing trade can trigger a chain reaction that affects performance for days or even weeks.
John (Medium Neuroticism): Balanced but Cautious
- In the trade: He feels frustration and doubt but stays disciplined with his stop-loss.
- Behavior: He closes the TSLA trade as planned, though he may hesitate on the next entry.
- After the trade: John reflects thoughtfully, but sometimes overanalyzes. He may adjust his rules unnecessarily, introducing inconsistency into his system.
Medium neuroticism traders like John have the benefit of emotional awareness but must guard against “tinkering” too much after a setback.
Jeremy (Low Neuroticism): Calm and Resilient
- In the trade: When TSLA moves against him, he remains calm: “This one didn’t work. On to the next.”
- Behavior: He follows his plan, logs the loss, and looks for the next opportunity.
- After the trade: Jeremy reviews the trade objectively, without letting it affect his confidence or strategy.
Low neuroticism traders like Jeremy thrive in volatile environments because they are emotionally resilient. The risk, however, is becoming so detached that they overlook emotional cues that might signal areas for growth.
Key Takeaways for Traders
- High neuroticism: emotional volatility, risk of revenge trading.
- Medium neuroticism: balanced but vulnerable to over-adjustment.
- Low neuroticism: resilient and disciplined, but may miss subtle self-improvement signals.
The MTRI Neuroticism Dimension is not about good vs. bad—it’s about self-awareness.
By understanding where you land on the scale, you can anticipate your reactions and build safeguards
into your trading routine.
For Mike, that means strict routines and accountability. For John, resisting constant rule changes.
For Jeremy, staying alert to subtle blind spots.
✅ Next up: we’ll explore how the MTRI Impulsivity Dimension affects trading performance,
and why fast decision-makers often need different strategies than their slower, more reflective peers.