Why Mindset is More Important Than Strategy
The journey to becoming a successful trader is often fraught with frustration, disappointment, and financial loss. For many aspiring traders, the quest for profits can be an emotional rollercoaster, marked by periods of euphoria and despair. But what sets apart the successful traders from those who struggle to make a profit?
The answer lies not in the trading strategy or system, but in the mindset of the trader. A winning trader is not someone who is naturally talented or lucky, but someone who has developed the mental toughness and resilience to overcome the inevitable setbacks and failures that come with trading.
A Positive Attitude is Not Enough
It’s easy to get yourself ‘psyched up’ when you first start out trading: One can merely convince himself or herself, ‘All I have to do is apply myself and I’ll achieve profitability.’ This can often be a useful positive attitude, but the ‘power of positive thinking’ doesn’t usually go very far in terms of achieving trading success. It makes you feel good in the short term, but then you find that mere hard work and persistence doesn’t pay off. It is necessary to use sound trading strategies, expose yourself to a variety of market conditions, and hone your trading skills. Successful trading requires talent, and there’s no way to develop one’s talents without extensive practice.
The Importance of Skepticism
Although a positive attitude is useful, a healthy skepticism is paramount. When it comes to trading, you can’t believe anything you read or hear. Even when a trusted mentor teaches you the ‘conventional wisdom,’ it is essential to remember that so-called conventional wisdom is true only when it is true; it is false the rest of the time. History in the markets only repeats itself when it does. And the only time you actually know that you’ve stumbled upon a profitable trading strategy is when it, indeed, produces a profit.
Trading as a Game
Convincing yourself you can master the markets with sheer determination and willpower isn’t going to get you very far. You must accept the fact that, in the end, trading is like a game. You’ve got to take it seriously on the one hand, but learn to enjoy the process on the other. Traders take the game seriously in that they acknowledge that real money is on the line and it is likely that real losses can wipe out one’s trading account. They address this issue through risk management.
On the other hand, they know that no trading strategy is foolproof. They realize that despite all their efforts, it is quite possible that some unforeseen adverse event can go against their trade, or that market conditions may just not be conducive to one’s trading plan. That’s where a happy-go-lucky attitude is useful. It is vital to view trading as a sport. If you score the winning point, fine. But if you miss it, don’t get too bogged down. Just pick yourself up and try again.
Motivation and Persistence
Eventually, with enough practice and experience, many novices will move into the realm of the seasoned professional. It is not going to happen overnight, however. It will take time and practice. That’s where the motivation comes in. It is easy to stay motivated for a short time if you think the payoff will be large and relatively immediate. But trading is a profession where years can go by with little progress. Some seasoned traders warn that it may take several years to achieve consistent profitability.
Over the years, a great deal of money will be spent on commissions, losses, apparatus, and instructional materials. The would-be professional trader isn’t fazed by it all, though. He or she views the money spent on trading as similar to what any professional spends on college tuition. He or she believes that eventually, his or her time and effort will pay off. The winning trader is highly motivated. He or she admits that trading is a challenge and that success is far from assured. Despite this harsh reality, the winning trader persists until he or she achieves consistent profitability.
Conclusion
In conclusion, the key to becoming a successful trader lies not in the trading strategy or system, but in the mindset of the trader. A winning trader is someone who has developed the mental toughness and resilience to overcome the inevitable setbacks and failures that come with trading. By adopting a more disciplined and realistic approach to trading, you can learn to master your emotions and improve your trading consistency. Remember that trading is a game, and it’s essential to view it as such. With the right mindset and a willingness to learn, you can achieve consistent profits and become a successful trader.
