All profitable traders have one thing in common: they dispose of positive habits that they cheerfully cultivate every day.
These habits are what make a successful trader: they build up his discipline and well-being, giving him a powerful edge over the market.
The main reason why most traders are not profitable is that they have no control over their behavior. This inevitably impacts the trading process: their trades and plans are as unproductive and inconsistent as their habits.
In this article, we will explore five powerful habits that will enhance the way you engage with trading and give you a spot in the realm of success.
Read books
With much probability the best habit you could ever have. Books are containers of all the knowledge that humankind has ever developed. They provide access to the information and wisdom gained with the sweat of every man’s brow since the beginning of recorded history. Reading books is like having the wisdom of many lifetimes in one single lifetime. It is a privilege: the successful trader recognizes this and makes the best out of every book.
The successful trader is focused on three main topics:
● self-improvement books
● trading & investing books
● history books
Self-improvement books contain the wisdom of human behavior. They are the results of research upon what permits humans to evolve intrinsically and build meaningful realities. The authors of such books have looked inside themselves and analyzed the behavior of others, plus the consequences. They shared with all of us their work, fruit of purposeful mind labor. It is a great privilege to access this wisdom because solving our inner problems and discovering and developing our inner strength helps us realize what we most desire. It gives freedom and capability of action.
While self-improvement books give us knowledge of the inside world, trading & investing books provide us with knowledge of that part of the outside world that interests us most, as traders. Becoming great in a profession is all about acquiring the most experience and wisdom possible. When we study the experience of other traders, especially successful ones, master of their craft, we “hack” the game and get an enormous edge over all those that didn’t take advantage of this privilege. Do not be afraid to spend much money on valuable books: they all come back eventually.
History books are the least treated but can give insight that no other branch of literature can give you. After all, isn’t experience just awareness of history? Acknowledging the events registered in history books will lead us to realize a fundamental principle of life: things happen in cycles. Studying history is nothing more than analyzing the different flavors of a cycle that repeats over and over. You can find this everywhere. This topic helps you develop an instinct that will make you recognize the stage of a cycle in the market.
Eat Healthily
Whoever takes this as an exaggeration or a meaningless belief should completely avoid day-trading. A successful day-trader has to maintain a healthy mind every day. The first step to having a healthy mind is to maintain a healthy body. To have a healthy body, you must eat healthy stuff.
The vast majority of people nowadays consume the worst stuff and pretend to be healthy or have a solid psyche. Most traders can’t get their success because they are constantly intoxicated by what they ingest. This results in an unbalanced being, that leads to vulnerability of mind. When the mind is vulnerable, the trader is subjected to all kinds of biases caused by the external world. We know very well what happens to a biased trader.
Eating healthy stuff not only improves how your body and mind work but also frees you from the addiction to pleasure. You don’t eat junk food because you want to destroy your being, you do it because it is pleasant. Specifically, it is pleasant to the ego. This dynamic reinforces the ego and all that comes with it, such as the need to gain pleasure and avoid discomfort. You get habituated, more and more, to act through your ego.
When you start feeding yourself without the need to gain pleasure from it but looking towards health, you habituate yourself to act according to your aspiration and without ego. You start to be more comfortable with discomfort. That’s how you will be able to close a losing position and be free from your ego when you are trading.
Two birds with one stone.
Meditate
Meditation is the most powerful instrument for the care of the mind. Meditation is to the mind as exercise is to the body. Very few traders have this habit. Anyway, these people are much more in control of their emotions and actions than all those who do not meditate at all. We know very well how important it is to have a clear mind when trading and how much influence has our mental state over it. Exercising our psyche with meditation is like taking care of the garden of our mind. We remove the weeds, prune and plant a few more flowers. The more flowers that are planted, the less space for weeds.
Respiration is what keeps us alive. A large part of meditating is respiration itself. Moreover, this action helps us re-balancing our state of being when we feel overwhelmed by something or emotionally unstable. It is our secret weapon as humans. When you find yourself lacking in front of a chart, leave it, go meditate, even for just 5 mins. Breath, re-establish your presence and your control. Feel that you are the owner of your mind. You will return in front of the charts with renewed clearance and power.
Exercise
As you do it with your mind, you should also exercise with your body. Exercising brings many advantages; they eventually improve the way we engage with the market, our efficiency as traders, and therefore our profitability.
Together with eating healthily, exercise gives the body of the trader the possibility of growing positivity and maintaining it. Imagine these two activities as the way to increase your “body wealth”. Approach this as you would approach the purpose of becoming rich with trading. After all, they both are all about positivity. Finding the strength to commit to having a positive body will help you get comfortable with the efforts of the process.
For example, finding the strength to exercise every day will improve your discipline, your endurance to discomfort, and your natural consistency. By getting used to leaving your comfort zone you will find it easier to resist temptations while trading.
Moreover, having a nice body and looking fit boosts your confidence. When you exercise, you release endorphins that reduce stress and improve your well-being. Trading without stress is a synonym of a clear mind and conscious thinking.
Listen to other perspectives
Don’t mistake this habit as being influenced by others, or as being insecure about one’s ideas. It is true that, especially in trading, one must have a solid individuality and remain true to his plans and strategies. But sometimes, placing ourselves in the other perspective helps us obtain insights to advance.
There could be wrong beliefs so rooted in our thinking process and paradigms that threaten our efficiency at the end of the day. No matter how good we have demonstrated to be as traders: it does not release us from the possibility of being wrong. Even Ray Dalio, one of the most profitable hedge fund managers and investors, was once remarkably wrong, albeit convinced otherwise [1]; that cost him a lot, but he gained as well in terms of experience.
Listening to others’ perspective open our minds to different possibilities. Subsequently, it is our duty to analyze unbiased and with the best intentions the whole situation and extrapolate the right conclusions. Then we give to Caesar what is Caesar’s, whether we are, or others. If this means having to admit that we are wrong: welcome it. Our goal is not to be right, but to be successful.
In conclusion
The success of a trader is not limited to his trading process. More often than not, his profitability derives from his success in other subjects.
One of these is having good habits and cultivating them every day of his life, as he does with his wealth through trading.
Reading books gives the trader the necessary knowledge of himself and the outer world.
Eating healthily and exercising improve his physical health. A trader in a positive body is unstressed and in charge of his mind and well-being.
Meditation is the exercise of the mind. A trader that meditates improves his self-control, clarity of mind, and balance. It gives him an evolutionary edge over other market participants.
Listening to others and trying to get in their perspective is a powerful way the successful trader can verify the rightness of his ideas and eventually improve for his aspiration.
Everything described in this article has the sole purpose of being informative and providing general information. The author has no intention of providing any financial advice, legal advice, or tax advice. Do not rely on this article to make investment decisions. Seek professional help before making any such decision. The author does not take any responsibility for loss or damage of any nature. The use you make of the information contained in this article is your sole responsibility.