How to Trade: A Disciplined and Winning Mind
One of the most essential components of successful trading is psychology. While it attracts people who genuinely like challenges, trading is known to be a fascinating mix of chess, poker and a video game. Naturally, many people have the desire to evolve into their ultimate best selves and develop their abilities to the fullest. This desire, accompanied by the overall pleasure of the trading and the monetary gain drives traders to challenge the markets.
Just like in every sphere of life, the mental baggage we bring along plays a key role in trading too. Nonetheless, high expectations on how the market is going to be might result in grief and anger when it does not go in the direction we were hoping and expecting to. We make the mistake of thinking that most decisions, especially the ones concerning money, we make with a rational mind and thorough evaluation of the facts, however that is not always the case. Quitting a 9–5 job in order to fully dedicate your time to trading should not be an exhausting experience of standing in front of a screen lurking every little bit of a change but rather a fulfilling feeling, maybe even solace. Then again, why quit a regular job and even tightly tie yourself to a screen, perhaps even for longer than before, and not even be satisfied by it?
What one could do to refrain from that emotional attachment instead is day trade for around 2 hours and then stop — despite of the wins or loses. It will not only make trading for a living a worthwhile venture but will also give you a peace of mind. A professional trader from Texas claimed that if you were to sit in a room with him and watch him trade throughout a day, you could not guess whether he is $2,000 behind or $2,000 ahead that day. He is so driven by the euphoria of the game and the determination to trade responsibly that he is not affected by emotions anymore.
One’s psychological inclination to win plays a major role in the outcome. If a good system is the only card one is pulling, it will surely not be sufficient. Moreover, in trading, one competes against the sharpest minds in the world and considering how unpredictable the market is, one needs to know what is about take place and leave emotions aside, if one wishes to win.
An inexperienced trader cheers up when prices move in his favor in contrast to feeling down when they work against him. Thus, this trader gets overwhelmed with emotions and distraught and turns to gurus or other market leaders to seek support and assistance, not realizing that the main leader of the market is price, as pointed out by Tony Plummer in his book Forecasting Financial Markets. As we mentioned before, when you do not let the outcome of the trading directly affect your mood and feelings and go into it with the right process-oriented mindset, you will not only make a living off trading but might build a durable trading career too.
The feeling of power and an emotional high the profits give to traders might persuade them to impulsively make reckless ongoing trading decisions that do not attain the feeling yet only result in more loss of profit. Many traders cannot stand the idea of severe losses in a row. However, what they fail to realize is that the problem is not their methods or the market environment necessarily but rather their thinking. As we notice, there are two modes to trading; one is “money-oriented” which clearly is more stressful, and “process-oriented” which is more pleasant altogether. Only after taking time to gather then evaluate their thoughts though, do they become successful traders.
Every day is a new day. We start fresh, we have the possibility to reinvent ourselves, reevaluate our purpose, and break bad habits thus consequently working towards reaching our goals. Furthermore, thinking outside the box, stretching outside the comfort zone, embracing unpredictability and uncertainty is the spark of life and, traders are particularly partial to it.
