Updated from its original posting on 2011-12-16
If you look at the line-up of traders in Wall Street trading firms, you’re likely to find more than a handful of former Division I athletes on the floor. Some companies, like SMB Capital (I’m sure you’ve heard of them!) have even been rumored to favor former athletes.
Why is this? What’s the connection between being an elite athlete and forex trading? I believe it has everything to do with the qualities and the mindset that these individuals have. Listed below are the five traits that I think successful traders share with elite athletes.
1. They are competitive.
Top athletes are highly competitive by nature and with this mindset comes their need to always look for advantages against their competition. Also, competitive athletes are often strongly self-motivated. There are few driving forces out there as strong as self-motivation. For a forex trader to be successful, he or she must find something that sets him apart from the rest of the herd.
Do you remember Isaiah Thomas? Thomas wasn’t the tallest person in the NBA but he was definitely one of the quickest players. In addition, he had an extremely ferocious personality. In game six of the 1988 NBA Finals, Thomas’ determination and speed enabled him to score 25 points in a quarter while playing with an injured ankle.
It’s this kind of motivation – this inner driving force to overcome competition – that fuels the best athletes and traders to go the extra mile to achieve their goals.
2. They take things one at a time.
In forex trading, you don’t have to be right all the time. If you take each loss (or win for that matter) to heart, you may end up being paralyzed by your emotions, thereby preventing you from moving on. Your vision becomes clouded, which leads to even more losses.
Athletes win and lose in the field, just as a trader experiences good and bad trades. But at the end of the day, they know that a single game doesn’t define them, and they can move on. They use the loss as a learning experience to perform better next time, and they don’t let past failure (or perhaps even success) negatively affect their performance in the future.
3. They have solid “basics.”
Before moving on to more advanced moves, successful athletes and traders make sure that they’ve got the basic skills covered. This is why professional basketball players spend hours and hours running basic drills and moves, as they have to work on their form on lay-ups and jump shots before they even consider more complex moves such as the step-back fade-away jumper.
Heck, even Kobe Bryant still practices free-throw shooting, taking countless shots during warm-ups to make sure that he can sink the shot when it counts. Similarly, successful traders make sure they have a solid foundation in the basics of trading. You’ll be hard-pressed to find a successful trader that doesn’t have a very good understanding of support and resistance levels and doesn’t know the basic chart and candlestick patterns by heart.
4. They have mental and emotional toughness.
Can you imagine what would happen if Roger Federer had caved in under pressure each time he found himself in the finals of a major tournament? He probably would’ve never broken Pete Sampras’ record for Grand Slam titles!
5. They continuously work to improve themselves.
The best are the best because they constantly try to improve themselves. Top athletes know that to stay ahead of the competition, they can’t just rest on their laurels. Just take a look at Manny Pacquiao, who over the past few years has developed from a one-dimensional fighter into a two-handed boxing beast!
I can’t stress enough how important this mindset is in forex trading as well. The markets are dynamic, and they will demand the very best of you day in and day out. The best in the business know the value of practice and hard work, they learn from their mistakes by reviewing past performances, and they also try out new strategies to add weapons to their arsenals.
Of course, this isn’t to say that you need to be an athlete to be a good trader. And neither am I implying that just because you’re a good athlete, you’ll be a successful forex trader. The bottom line is that you must treat trading the way an elite athlete treats his sport. It’s a skill that you must continue to hone. In essence, you are an athlete and the markets are merely your playing grounds.