IQ Is A Myth and Why, However You Dress It Up, Your Cognitive Ability Isn’t Enough To Make You A Great Trader

You are a smart lady or gentleman and you’ve decided that you want to be a professional trader.  You think that if everything pans out that you would like to manage other peoples money for a living, perhaps as an Asset Manager or Commodity Trading Advisor.  Or you fancy getting onto an institutional desk and trading their massive proprietary capital.

You’ve always had a high IQ and been strong academically throughout life even doing all the extracurricular activities to make your CV stand out.  You went to a good University and came out with a decent degree.  You got offered jobs that you wanted and now you have realized that you are drawn to the markets.


A recent psychology study by the University of Western Ontario has shown that the notion of IQ is a ‘myth’.  “There is no such thing as a single measure of IQ or a measure of general intelligence”.

The study determined three factors that combined to create human intelligence or our ‘cognitive profile’ -> reasoning, short-term memory and verbal ability.

Now here’s the catch……

You definitely need those three to be a good trader (verbal intelligence being least important unless you are tying to raise money in which case it may be the most important) but what the study overlooks is the key area of intelligence that is needed:


Victor Sperandeo covers this:

“Assume that you’re a brilliant student who graduates from Harvard summa cum laude. You get a job with a top investment house, and within one year, they hand you a $5 million portfolio to manage. What would you believe about yourself? Most likely, you would assume that you’re very bright and do everything right. Now, assume you find yourself in a situation where the market is going against your position. What is your reaction likely to be? “I’m right.” Why? Because everything you’ve done in life is right. You’ll tend to place your IQ above the market action. ”

Perhaps that describes you a bit?  Well here is the hit to the sensitive bits again from Victor:

“I discovered that you can’t train people how to trade by just imparting knowledge. The key to trading success is emotional discipline. Making money has nothing to do with intelligence.”

Did you get that?  Making money has nothing to do with intelligence!!  This interesting study on IQ leaves out the key facet that you need to have to be a trader.


The good news?

You recognize this and decide to work on it.  You can develop your emotional intelligence.

A good place to start would be:

  • Reading this site
  • Reading the Inner Voice of Trading
  • Taking up meditation, yoga, tai chi etc
  • Joining a Trading Tribe
  • Finding a coach or mentor


Please note: I reserve the right to delete comments that are offensive or off-topic.