The most important thing a trader needs is a strong mind. I’m not talking about investors who take passive positions and ride them up and down. I’m talking about traders and active managers who are seeking superior consistent performance. You might ask: Doesn’t EVERYONE want superior performance? Surprisingly, the answer is no. Some people are risk averse and are happy with a modest return. Many traders just like the action and are not in the game to win. Others “say” they want to do well, but never work at it or do the things it takes to achieve success. Furthermore, there are others who constantly like to complain and subconsciously want to lose. You have to read Ed Seykota’s interview in Market Wizards to understand this concept better.
The most successful people in the world all have one major thing in common: They are driven beyond belief! The top athletes, traders, businessmen, etc. all do things behind the scenes that most people are not willing to do. Even Carl Icahn admits that you have to be “a little obsessed” to succeed and be at the top of your game. I say this with humility that people have no idea how obsessed I am with producing consistent results. I use the word “consistent” because that is what makes people the best. For example, Paul Tudor Jones is not one of the best money managers in the world because he made money ONE year. It’s because he has consistently been positive for over 25 years. That’s the type of goal I am obsessed with shooting for. I realize there are few people who can achieve it, but why be in this just to be average?
A strong mind is important because it allows you to shut out the noise and have confidence in your ideas. You can’t say how much you love a stock, only to sell it when an analyst downgrades it or someone on TV says they don’t like it. That is a game for the weak-minded. Strong-minded traders have confidence and conviction, and that is 80% of what it takes to succeed at anything in life.
Now I don’t claim to be a “self-help” guru, but there are many things you can do to maintain a strong mind. I could write a book about this, but here is a good list to start with: Strengthen your mind by reading and feeding it with great ideas, strengthen your body by working out, surround yourself with great people who encourage you, and focus as much as possible on the positive. We all have good and bad things that happen to us, but the strongest people tend to brush off the bad things and focus on the things we are blessed with. It’s tough to have a weak mind when you constantly have a feeling of gratitude. Good luck everyone!
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