Trading Mindset of Successful Traders

By | January 21, 2019 4:14 pm


If you hang around traders talking shop very long (and being honest), you will hear this story repeated endlessly. Many people who have devoted themselves to becoming a professional trader have experienced success in other fields before they came to trading. They know how to trade when the pressure of risking capital is not part of the equation of trading success.

In fact, one of the first flaws they bring to their new (or not so new) career in trading is that they assume the same psychological skills that aided them in their past career could also be leveraged to produce the same kind of success in trading without modification for the rigors of trading.

This is a misguided, and often an account damaging, flaw. Somehow this aspect of risking capital in real time makes for a completely different calculus of performance. Success in many other fields is rooted in pushing your will upon the world and, by sheer hard work, will power, and ignoring fear, conquering the world “out there.” The skills of setting goals and assertively making those goals happen by taking personal control of fear are honed into powerful tools for shaping the future. And with this kind of thinking, if you don’t succeed, you just push even harder to make things happen. Additionally, you must be in control of the factors that bring forth the envisioned reality.

At the core of this paradigm is a belief in the certainty that a person can control outcome in the external world. And this is where the struggling trader stays stuck in beliefs that do not function effectively in trading, where there is no certainty.

  1. Have a system with an edge. If you don’t have a system and rely on a vague statement like “I’m a technical analyst with 20 years experience, I will view the charts and make my decisions” – you are going to lose, and lose badly. Your system should cover exits and position sizing and portfolio risk comprehensively, which are far more important than technical/fundamental analysis and market predictions.
  2. Keep accurate records and review them regularly. Log mistakes and reduce position sizing when you are making on average more than one mistake in 20 trades. A mistake is anything that is not in your system rules. If you don’t have rules stop trading, since you suck.
  3. Understand that beginning traders enjoy the feeling of picking market tops and bottoms, it gives a little ego boost which is enjoyable. Therefore they are biased towards seeing topping and bottoming patterns, even when they don’t exist or are destined to fail.
  4. FOCUS ON THE TRADING PROCESS Do not start a trade while looking forward to the outcome. Stop counting your chickens even before the eggs are hatched. Focus more on the trading process, making sure that you have followed your plan accordingly. This way, you can secure better profits while learning more about trading at the same time.

  5. HAVE REALISTIC EXPECTATIONS As much as we all want to dream high, we should focus on having realistic expectations. Instead of anticipating how much you can gain at the end, focus on how you can meet that vision. Develop and improve your strategies first before counting your profits. Once you already have a proven strategy that can help you secure a win against a lot of trades, you will notice that you have been consistently accumulating profits which slowly makes its way up to your initial expectations.

  6. Focus on bigger picture Instead of focusing on their losses, successful traders focus on the overall performance of their trade. They trade, regardless of the losses they encounter, because they believe in their system and in their winning probabilities.

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