Trading is often regarded as an activity that shares similarities with competitive sports. This statement might sound far fetched but it is actually pretty accurate on many levels.
The quintessence of trading is to compete against other participants in a zero-sum game. It becomes logical then that the better trained and more hardworking traders end up being the most profitable ones. Both traders and athletes share multiple characteristics but out of all of them, three can be considered as determining in the process of a journey to success: the mindset, the preparation and the resilience.
Competing at a high level and trading require to put yourself in the right psychological conditions. We often hear that to become a champion, you need to think like a champion. But what it is about exactly?
First of all, a mind cleared of all unwanted thoughts is a necessity. You will not be able to practice/train/trade correctly with negative parasitic ideas cluttering your mind.
Yoga and meditation are helpful tools to achieve mindfulness and unclog mental space.
Accepting success/failures and taking responsibility for them is another key. Whatever the outcome of an event/trade, you always want to place the responsibility where it is: yourself.
It is easier to think that the market is wrong and against you than it is to accept you made a mistake. But at the end of the day, you are the one who decided to participate and took the risk.
Training is an important part of a trader’s journey. Exactly like in the routine of an athlete, a trader needs to optimize his time to become better. It means scheduling your tasks and repeating them over and over again.
Analysing markets and building a working trading strategy on the long term is not an easy task. It takes a lot of time and dedication.
A neglected part of the routine is resting time. Having a good sleeping schedule is essential but staying away from charts and practicing psychical activities is also an important aspect far too often forgotten. If you want to make it in the long run, you need to be disciplined in other areas of your life, not just trading.
As Benjamin Franklin said: « By failing to prepare, you are preparing to fail ».
The path to profitability is full of pitfalls and it is very unlikely that you will thrive within the first months. Forget about the pipe dream that influencers are trying to sell you on social medias. Whether you consider it as a hobby or a full time activity, it is a hard task. And the market will shake you out on many occasions.
Even after years of practice you could face a losing streak, lowering your confidence and ability to be successful (in the short term).
Experiencing a winning streak could also disturb you emotionally and generate an overreaction. Becoming overconfident can lead you to lose focus and stop applying the rules that led you to success.
What differentiates good traders from the others is their capacity to emotionally and mentally cope with successive wins and failures without feeling disrupted. This is what we call resilience and this is also a very distinctive character trait of champions.
We have seen that competing at a high level and trading markets shared similarities for multiple reasons.
It is therefore not surprising to find former elite athletes in Wall Street firms.
Like athletes you do not need to be the absolute best to become a winner and generate some profits. Being part of the 1% requires discipline and methodology.
If you try to apply these rules and proceed slowly step by step, you might enter someday the 1% club.
PEOPLE WHO READ THIS ALSO VIEWED: