Prop Trading Futures

Mental Toughness for Traders

What makes top traders stand out from the crowd and achieve results that for the most are just behind imagination? Are they genetically destined to success

Someone is saying they are “one trick pony” tailored by nature to excel in a particular niche. I personally disagree with this conclusion for three main reasons.

Firstly, in the long term be a “one trick pony” doesn’t allow one to survive in a changing environment such financial markets.

Secondly, there are several cases of successful traders that changed their approach to markets drastically during their career. The first example that comes to my mind is from the book Reminiscences of a Stock Operator a fictionalized account of the life of Jesse Livermore. The book tells the story of Livermore’s progression from day trading in bucket shops, to market speculator, to market maker and, finally, to market manipulator. Surely Mr. Livermore was not a “one trick pony”.

The third reason is that many highly successful traders started from being losers.  If you ever read any book from Jack Schwager’s Market Wizards series you are aware of how many of those top traders had a tough start in their speculative endeavors.

Surely it is difficult to separate innate ability from hard work, but one thing we can certainly agree upon these exemplary traders is their dedication, hard work, discipline and passion.

It would appear that hard work is a major component in the success of successful traders. But, is that all? Recent research seems to indicate that it’s all and suggest that it takes around 10,000 hours of focused work to reach the threshold of greatness. But realizing that hard work was the reason of their performance leaves an open question: how the hell they manage to get it done so consistently?

The key to success is being mentally tough

What does it take to be mentally tough? There are three qualities for traders who say they want to perform at the highest levels.

1) Ambition

Can you work on your trading alone or you need to be constantly engaged in social media, forums, etc.? Can you find ways to make your daily and weekly trading preparation regardless of family, friends or other potential interruption?

Usually traders that can work and prepare themselves alone tend to have higher levels of mental toughness and are way more ambitious. Their goals are bound to their inner-self more than on other fellow traders that they may have met in forums and social media. With this I do not want to understate what is the importance of sharing with others and being part trading room, but rather underline how this should be an addition, a complement to each trader solo-preparation.

2) Discipline

Do you shape your preparation and your lifestyle to fit your goals? Do you work on your mental and psychological weakness to pursue those goals? Are you able and willing to make tough decisions to pursue your dreams?

You may be a very clever person and eventually have good intuition and gauge on market psychology, but you may end up to be less profitable of a less talented, but mentally tougher trader. If you don’t really believe that you can improve, it is difficult that you can really grow as a trader.

3) Perseverance

Are you willing to trade, train and struggle with markers for all of your life? Are you looking for immediate success, or you can postpone it until the time is right, even if that is years in the future?

Successful traders are nimble and determined to improve for all their life, no matter how rich they become. Traders need the patience to work steadily during tough times, drawdowns and family issues.

4) Leap of faith

Do you really believe you can succeed even when the conditions are not favorable? During tough which do you think more about? The variables that you can control (your trading plan, your execution, etc.) or the variables that you cannot control (FED, good luck, etc.)? Do you accept drawdowns as a part of your trading business?

All traders go through tough times and still have the patience and the discipline to work steadily through those periods, knowing that better times will come later.

If one of these qualities is lacking, the trader will not achieve remarkable long term financial success.

Mental toughness is maybe the area of trading where the nurturing part of the success equation is most evident.  Some traders have internalized these qualities from the very beginning of their adult life and come to trading already mentally fitted. Others have not. For the latest trading can be a double challenge that starts with improving their mindset first and their technical trading skills later.

Perhaps the best thing you should do to improve your mental toughness is to work as much on psychology preparation as you do with market preparation. And, yes, it takes double time and double effort!

image: vincenadmath