I’ve got something very exciting in the pipeline for you…
It’s a new (and FREE) online resource designed to help you make more money from your trading (whatever your experience). You’ll have access to tools, strategies and a community where fellow traders can come to support and inspire each other.
But I’ve just reached a really tricky part…
So today, I’d like to share a few ideas and ask for your feedback, just so I can make sure I’ve covered everything.
You see, I’m about to tackle the number one deciding factor in whether your trading delivers consistent profits, or whether it becomes the source of frustration and heartache.
There’s no reason for it to be the latter, of course. But that does all depend on how you approach things…
It all comes down to your ‘trader’s mindset’
I’ve been giving a lot of thought to what makes a healthy trading mind. I’ve been delving through some of my old records in an attempt to re-live the emotions I was feeling at the time. And I’ve also been talking to some old pals to get their angle on things.
And I think I’ve cracked it…
I’ve boiled down my idea of a winning trader’s mindset to 5 core ‘building-blocks’.
I’m pretty sure I’ve identified the five specific areas you should tweak, tune, and measure on your journey to becoming a consistent trader. I can picture myself struggling to come to terms with each of them in my early days.
But of course, it all would have been so much easier if someone had laid them out on a bit of paper and jabbed a finger at each one in turn…
“These… are… the … five… things… to focus on!”
So I’d like to share my ideas with you today.
I’ll also explain where traders often get things wrong. And it would be a big help if you’d let me know whether you identify with what I’ve uncovered, or if you think there’s an even bigger ‘elephant in the room’ causing frustration in home trading rooms up and down the land.
Here’s what I’ve got in place…
The 5 Must-Have Psychological Traits of a Successful Trader
1) Rock Solid Self Discipline
Despite what you might think, people aren’t born with natural self discipline.
Even ramrod-backed military officers had to learn to apply themselves at some stage.
Self discipline is all about identifying a goal or target, and then applying the magic key: developing the right mental framework that sets you on the road to achieving it, even when actions you need to take go against what would feel most comfortable.
The discipline mistakes many traders make seem to come once they’ve got a little bit of experience under their belt. They’ll start over-riding the trading signals their system generates based on what they ‘think’ the market is going to do. Of course any mathematical edge inherent to their system becomes is cast aside the moment trades are missed, or other ‘non-system’ trades, are taken.
The ability to take an almost mechanical approach, at least while the trader is getting his first campaign underway, is an essential stage of the trader’s apprenticeship. That’s what helps set the stage for good trading discipline for years to come.
2) Eliminate Unhealthy Reactions to Losing Trades
At times the way the market behaves can feel very personal indeed. When you suffer a run of losing trades, or see the market turn immediately against your latest trade, you can almost hear the sniggers of the big-boys as they take another scalp.
But it’s all in your imagination.
The truth is the market doesn’t care whether you’re making money or losing money. It’s too busy roaming around on its voyage of ‘price discovery’ to care.
Now keeping a healthy perspective on losing trades does need a bit of focused attention. But if you can’t distance your ego from the results your strategy is giving you, you’re almost certain to shoot yourself in the foot through revenge trading, or through a fear based inability to pull the trigger.
3) Accept Winners and Losers Are Part of The Game
To trade effectively you simply must accept both wins and losses are all part of the game. I know we’d all ideally like every single one of our trades to be profitable but it’s just not a realistic proposition, despite what the latest FX robot software creator might have you believe!
Profitable trading is not a difficult equation to follow. You simply need to make more money on the trades that win than you give back on the trades that lose.
There’s no need to aim for impossibly high levels of accuracy. Would it surprise you to know some of the most successful traders win on ‘only’ 40% of their trades?
4) Keep a Carefree State of Mind
I wouldn’t dream of underestimating how tricky maintaining a carefree state of mind can be when your hard-earned money is on the line. But like many things in the markets, the ‘right’ way to do things is almost the exact opposite of what you’d think.
To let your trading bank snowball into a sizeable sum requires a certain devil-may-care attitude. I’m not talking about being reckless, but you certainly must be willing to embrace risk.
You’ve probably heard the saying “scared money never wins” so make an effort to take the opposite stance instead (remember, we’re aiming for carefree not careless).
And if you can avoid micro-managing your positions it’ll help keep you available to opportunities that run-on for big profits instead of being left, open-jawed, on the sidelines.
5) Thinking in Terms of Probability
This really is the key to the kingdom. As soon as you start thinking in terms of probability (the profits your strategy has the potential to deliver over a series of trades) rather than living or dying by the result of your very next trade, you’ll have made the biggest breakthrough possible.
Gaming corporations spend billions of dollars a year to attract punters to the bright lights of their Las Vegas casinos. If you’ve been, you’ll know what I’m talking about. It’s a truly eye-opening spectacle. But how do they justify spending all that money enticing people to participate in gaming events that have purely random outcomes?
That’s right; they know well the mathematical probability of every single game in the room swings very much in their favour, guaranteed.
They don’t worry whether they should accept a bet from this particular high-roller, and they don’t bat an eyelid when a little old lady pulls the handle on a one-armed bandit and hits a six-figure jackpot.
All they’re interested in is keeping the cards flopping, the roulette wheel spinning, and the slot machines whirring because that means their proven edge in constantly being put to work and they’ll always come out ahead.
And that’s exactly how you need to think about your trading. Forget about individual wins and losses. It’s all about the profits that have racked up at the end of the month, or the end of the quarter. You know, money you can actually withdraw from your account and spend!
So what do you think, have I covered the big trading mindset problems with my list of 5?
Of course, in the beginners guide I’ll be going much deeper into the things you can actually do to overcome mindset problems you might come up against. But I’d love to know what you think…
Which trading mindset issue would you most benefit from some help with?
Email me rich and let me know.
Be Prepared: Market Moving Data Coming This Week (London Time)
Wednesday 3rd December 2014:
09:30 GBP Services PMI
13:15 USD Non-farm employment change
15:00 USD ISM Non-manufacturing PMI
Thursday 4th December 2014:
12:00 GBP Interest Rate Decision
12:45 EUR Interest Rate Decision
13:30 EUR ECB Press Conference
Friday 5th December 2014:
13:30 USD Employment numbers
Monday 8th December 2014:
– no big reports
Tuesday 9th December 2014:
09:30 GBP Manufacturing Production
We’re got some pretty big data release on the calendar for the coming week – watch out for those interest rate decisions on Thursday and of course, our old friend US Employment numbers on Friday!
Don’t forget to email me your opinion on the trading mindset at rich.
And do make sure you look out for my next email as it will contain details of your new and 100% free trading resource.