You do not have to be exceptionally smart to be a successful trader

financial trading

Perhaps one of the biggest misconceptions that most people seem to have about professional traders is that they are experts in ultra-intelligent Ivy-League mathematics who have some superhuman ability to make money in the markets. This is not really the case; In fact, many successful traders never went to college or never finished, like me, because being a successful trader requires a skill set that is not taught in most schools.

Actually, being a successful trader is really more a skill based on psychology than a technical or number-based  skill like many people think. You do not need a university degree to be a profitable trader and you do not need to understand mathematical calculations.

Humans, in their nature, are not good for financial trading

While it is true that some people are, of course, a bit better at trading than others, it is also true that the habits and mentality we need to constantly get money out of the markets is not something that anybody is born with. Basically, we come with the “preloaded” chip to be a disaster in trading.

financial trading

Evolution visit this site has had much more time to have an effect on our more primitive brain areas of “fight or flight” than our more advanced brain areas that have evolved much more recently and which are what we need to be good traders. When we have our real money at stake in the markets, our brains basically behave as if someone or some animal was about to steal all the food that we just worked hard to hunt and bring back to the cave. Therefore, when we lose that food (money) we get excited because we know we have to work to get that food back and we are still hungry. Now, in the days of the caveman, our primitive brain areas would serve us well by urging us to return to the forest and hunt another animal … or we will starve to death.

fast- forward thousands of years and here we are in the 21st century sitting on our computers trying to multiply our money (food) gained with difficulty by pressing buttons. We have really only lived in the era of computers and modern technology for about 50 years, and electronic trading on the Internet is much newer than that. So, the point is that our brains are basically sending signals to us as if we were cavemen while we operate, and this is why we immediately re-enter the market after a loss or why we assume higher risks after reaching a large trade. Winner. To overcome this, we have to use our more advanced brain areas, such as the prefrontal cortex.