How To Develop A Winning Trader’s Mindset » Learn To Trade The Market
Are you ready to stop toying around and start making a serious attempt at trading profitably? If you want to trade with the big boys you will have to act like a big boy and stop behaving like a child in the market. That’s right, today’s lesson is a no-holds-barred in-your-face mother-load of brutal honesty that only yours truly would dare serve up, and I’m serving it up ice cold with zero apologies, because you NEED to hear this if you want to WIN!
It’s time to get your sh!t together if you want to compete with the big boys of the trading world. There is absolutely no other route to trading success other than taking a cold hard look at yourself in the mirror and deciding if your current trading behavior and mental processes are pushing you in the right or wrong direction.
I’m not saying you have to be Superman, you’re only human, but to make it as a trader you ARE going to HAVE TO step things up a notch by thinking and operating in a more efficient, pro-success manner. Clearly, what you have been doing has probably not been working or you wouldn’t be reading this article most likely. So, if you continue to do the same things and are just too lazy to figure out the problem and fix it, you have only yourself to blame for your failures (in trading or other areas of life as well).
Mental fortitude is defined as the ability to focus on and execute solutions when in the face of uncertainty or adversity. Ask yourself this, in what other field is there as much uncertainty or adversity than in trading? Hard to think of any besides being in an active combat zone in a war.
If you hope to make money as a trader on a regular basis, you have to have the mental fortitude of an Oak tree; unwavering discipline in the face of the near constant temptation and uncertainty that IS the market.
- Emotional discipline – If you want to succeed at trading you have to be emotionally disciplined. What this means is, you cannot chase every single ‘rabbit’ you see. You have to wait, wait and wait some more for the slow, weak, easy trading prey. This is called conserving your limited risk capital for the high-quality trade setups. What does it take to be emotionally disciplined? Mental fortitude. You must have the ability to focus on and execute your trading plan with MILITARY PRECISION even in the face of constant temptation.
- Survival of the fittest? – Is trading only for the genetically gifted in discipline and mental fortitude? Whilst some people may have an easier time with this than others, I truly believe anyone, if they want it enough, can develop the mental tools needed to become a consistently profitable trader. To read more about becoming a consistent trader, check out my article on consistency in trading.
- Money discipline – Not only do you need to be disciplined with your trading plan and trading strategy, you MUST be disciplined when it comes to money management and this means discipline in both risk and reward. To understand how to be disciplined in managing risk, check out this article on how to trade with discipline. For more info on managing rewards and profit targets, check out this lesson on the psychology of taking profits.
State of Mind
Your state of mind, even when you are not in front of the charts or thinking about the markets, plays an absolutely critical role in your ability to successfully trade the markets.
- Self control – Similar to what we discussed above about discipline, but what I’m talking about here is more of a general sense of self-control. Typically, people who have high levels of self-control in other areas of their lives, make good traders. If you are someone who is very disorganized, physically very out of shape or otherwise lacking in major forms of self-control, you will need to fix this if you want to make money trading. It’s very difficult to ONLY be a highly controlled person in trading if you aren’t controlled in other areas as well.
- Self-confidence – Anyone who knows me personally knows I am a VERY confident person. You have to be this way to make money as a trader. There is no room for self-doubt and hesitation in the markets. To learn more about this, read about the role that confidence plays in trading. You must act like you’re already a winner and think and behave like a hedge fund trader even though you’re not yet there. This is the only way to ever get there!
- Be counter-intuitive – You have to train yourself to be someone who thinks counter-intuitively. What that means is, basically you have to think different from the masses of traders who fail, from the “herd” of sheep, so to speak. When a market looks like it wants to breakout, it’s likely to be a false breakout, but most traders get sucked into the first breakout they see, only to get stopped out as the false break materializes. This is just one of many, many examples where a market looks and even ‘feels’ like it’s going one way, and just when everyone is onboard it reverses sharply the other direction. I’m not saying you will always avoid losing trades, not by a long shot. I’m saying you should be patient, have a trading plan, don’t jump the gun.
I believe that trading should be viewed and treated as a business. Your trading plan should also be your business strategy in the markets. It should include things like, the overall style you’re trading, examples of ideal setups, risk management plans, stop loss placement strategies, profit target placement strategies, daily trading affirmations and more.
Any business has a plan and systems in place. You should do the same with your trading. If you don’t have a plan then you’re really just gambling.
- Reinforcement – Whatever your trading strategy is, you need to reinforce it on a regular basis so that it becomes part of a winning traders mindset. My personal trading strategy and the one I teach to my students is essentially a “less is more” approach, or K.I.S.S. (keep it simple stupid). I focus on higher time frame charts and I BELIEVE in the edge that my select price action signals provide for me. This is all built into my trading plan and I go over it daily to reinforce it into my psyche.
- Self-belief / confidence – You must truly believe in yourself and in your ability and in your trading strategy. As I said earlier, there is no room for hesitation if you want to succeed long-term in the market. That said, do not get overly confident, as too much confidence in a trader is just as bad or worse than too little.
Structured Daily Trading Routine
What does your daily trading routine consist of currently? Do you even have one? If you aren’t sure, then you don’t. You should be able to easily tell someone else what your daily trading routine looks like and you should have designated times for analyzing the markets each day.
- Routine lead to habits – The value and power of a structured daily trading routine cannot be emphasized enough. Repetition of the brain ‘muscle’ by way of routines is how you form habits and habits either make you or break you, depending on what type they are. Read more about routines in my article on the the power of trading routines.
- Daily routines of winners – Winning traders think differently from you. They act differently from you. Their days are more planned and structured than yours. It is just a fact that the more organized and focused you are, the more successful you’ll be, at anything. Winning traders are not easily distracted from their end game, from the long-term prize. They have long-term and short-term goals and they write them all out, the short-term goals build up and lead to the long-term goals. These things are what winning traders think about everyday. They aren’t wasting tons of time on T.V. or out with friends. They are busy learning, staying fit, staying focused and following their trading plan with discipline.
Accountability and enjoying the fruits of trading
One of the key components to developing a winning trader’s mindset is keeping yourself accountable. There are no “bosses” for a trader, other than yourself and your family (if you let them know what you’re doing with the trading money lol). Hence, you MUST be accountable to something, that something is your trading plan and your trading routine (mentioned previously).
- Trading plan – Once again, you need a trading plan, a tangible one, not one that’s all mental. Print or write it out, tweak it as needed, just make sure you review it weekly at least, daily at best. This is one way you stay accountable and staying accountable helps you maintain discipline and maintaining discipline helps you forge positive trading habits and positive trading habits make you money consistently.
- Trading journal – Along with your trading plan, you need a trading journal in which you log your trades and the details of them. This is essentially where you will write a daily market commentary, similar to what I provide my members each day. You can do this on your computer or write it out, just make sure you do it. This will help you stay accountable.
- Enjoy your life, NOW – Don’t wait for the trading profits to start rolling in to begin enjoying the low-frequency, end of day trading style that you will learn on my site and in my courses. Instead, start implementing this approach now and start enjoying its fruits. Trade and think less about your trades and you will end up making more money in the long-run, this is a core tenet of my trading philosophy. Trading in this manner allows you to take a set and forget approach where everything is slowed down and you have time to live your life and fit trading in around your busy schedule.
- Real goals – You need to make each point in the above lesson small goals that you work on one by one. The bigger, end goal of “trading success” is attained by breaking it down into many smaller goals that are more easily attainable on a weekly and daily basis. Trading success is like a puzzle and you will not complete the puzzle until you have each piece mastered and in its rightful place.
If you put two traders side by side, trader A has a million dollar account and a huge multi-monitor setup, access to the best data, etc. and trader B has a simple laptop and just $1,000 but is armed with a winning mindset, I would put my money on trader B Every. Single. Time.
It’s often been said that trading is 80% mental and 20% technical. I teach both the technical and mental aspects in my trading course and members area but by and large the mental aspects are more difficult to master, this is why I write articles like this one. It’s not enough to just learn a trading strategy and fund an account, you have to ACTIVELY make an ongoing effort to not just attain but MAINTAIN the proper trading mindset. One simple and easy thing you can do to start priming your brain for how it needs to work to win in the market, is getting organized. Get more organized in your house, in your job, heck, organize your car. You need to generally be an all around better person if you want to make money trading. A better version of yourself, I should say, and don’t you want to be that anyways?
So, I say to you, are you ready? Are you ready to become a better, stronger and more efficient and successful version of yourself? Only you can decide. If your answer is yes, then you better get ready to make some meaningful changes because nothing different is going to happen without change.
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