Having the right trading mindset is an integral part of surviving in the financial markets. By building on the correct set of attitudes, beliefs, and habits, you stand a better chance of being able to successfully weather obstacles in the trading world. Developing a winning mindset is not always easy, however. If you’ve experienced recent losses, you may find it harder to remain positive. That said; many successful traders appear to have thought patterns which serve them well in the long run, so let’s look at how you can approach the markets with the right frame of mind.
Perseverance and Commitment
If you want to become a wide trader, you have to accept failure as part of the game. More importantly, focus on learning from your mistakes and move forward. Many traders give up due to multiple losses. This is natural, but only those who strive harder to get back in the game move onwards and (hopefully) upwards. Commitment to your future goals and trading strategies is crucial here. If your previous strategies were not so profitable, test new ones, but do not keep jumping from one strategy to another.
In the end, you need to be passionate about what you do. As renowned trader Ed Seykota says, the reason for his success is his love for the financial markets. He considers trading not as a hobby, but as an important aspect of his life.
No Attachment to Ideas and Strategies
Colm O’Shea, a trader who was an employee of the legendary George Soros, once said that Soros never had any emotional attachment to his ideas. Even when he made millions in forex, he could always get out of his positions easily when the markets went in the opposite direction. This means that as a trader, you have to be flexible in your decisions. Objectivity is crucial; decisions should be quick and based on current circumstances rather than emotions.
There is another important lesson to derive from this. Emotions have no place in trading. You should not keep on making the same mistakes to prove that your strategy works. Of course, the more you trade, the greater the experience you will gain. With that, your intuition levels will rise too.
Always Trust the Numbers
Trust the market and look at your technical indicators. Commodity speculator Richard Dennis believes that when traders use their trading systems for signals, rather than their own beliefs, there is no scope of fear creeping in. This is especially true if the system has proven itself right in the past.
Traders should also keep track of their performance metrics. Maintain a trader’s journal to evaluate your wins and losses. The best way to gauge your performance is to plot the last 20 or more trades on a graph. This will give great insight for future decision making.
Lastly, you should have a hunger for growth. Always continue to learn new strategies and keep a positive outlook on feedback. A winning mindset is all about humility. Ego and envy have no place in a trader’s journey.