To be a successful trader one must adopt a successful mindset.
This post is not geared toward any specific strategy but more so the state of mind one must have to trade successfully. Without a solid mindset trading can become a very emotionally straining task.
You can’t let doubt and fear from past loses cloud your judgement. If you truly have a trading strategy setup, setting up your mindset will allow you execute it more efficiently.
What is a Trader’s Mindset?
A trader’s mindset can be described as a calm mood, where you open yourself up to suggestion. Impulse buys almost never turn into profitable trades. Yes sometimes you’ll get lucky but it won’t produce results over the long term. Keeping a calm head will allow you to stay true to your plans, and keep your trades in line.
The second part, keeping yourself open to suggestion is simple. A trader is trying to spot trends and trade on these trends and predictions of where they will go for profit. Keep your mind open while you do your analysis. Find the opportunity and see if the market will recreate those conditions for you.
How to make more profit
Making more profit is simple on paper. You need better trades. Buy lower sell higher and vise versa. But in order to keep your trades profitable you need to remove any impulse from the equation.
For example have you ever been analyzing a trade, found a nice level for you to buy in and make some profit. You just need a quick pullback, price action and trend are in your favor and you decide that it will probably hit the 50% on the Fibonacci retracement.
You throw an order in for your price level and wait. The price drops but not as much as you’d hope. It begins consolidating above where you want so you jump in hoping not to miss the trade.
Well after about 30 minutes of consolidating the price drops down into the level you once wanted. You freak out and take a loss just as the price does exactly what you predicted.
Since you were acting on impulse you lost every moment of that trade. Impulse will always bring you loss, luck will not help when you can’t stick to your strategy. Stay true to your strategy if you miss out move on to the next.
Don’t take a losing trade just because you want to be “right”. Right and wrong don’t exist winners and losers do. No one can predict where the market is going you need to make an analyzed guess.
How to make better trades
When a new trader starts to hone their strategy, it can garner a good amount of loss. So much so, their equity curve may be negative for the first few years. While a trader learns, if they have real money on the line, they can open themselves up to huge loses.
Making better trades is simple. Practice on a demo account. Plenty of brokers offer demo accounts to get started, with live market data. Allowing you to trade as if you had your investment. Only thing is on a demo the money isn’t real. It’s strictly practice.
Demos are great. I really suggest you use a demo account to hone your skills before you put your own money on the line.
Once you learn your strategy, the best way to make it profitable is to manage your risk/reward ratio. An article on that will be coming out soon, follow to get the latest trading information.
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What you must understand beyond any of this is that the “market” is not a negative entity. Nor is it a positive entity. It is just a neutral body of information that offers opportunity to those that can spot it. Can you spot the markets opportunity and can you drop the fear?
If you want further reading on trading in the “zone” click here.
As always, any questions please comment below.