Trading the markets requires cultivating the right mindset. You must be relaxed, logical, perceptive, and ready to tackle anything the market throws at you. Unfortunately, this sounds much easier than it actually is. Trading is a difficult profession with unique issues that other professionals don’t deal with. If you can identify these issues, address them, and halt their influence, you can cultivate the mindset of a winning trader.
Why is trading more difficult than other occupations? There are many differences between trading and other occupations and these differences often impede one’s ability to cultivate a peak performance mindset. For example, in many professions, a group of scholars have clearly defined foolproof ways to gain success. And the leaders of a particular profession argue that if one follows these well-proven pearls of wisdom, success will surely follow. In most professions, these claims are somewhat supported, but when it comes to trading, many trading gurus claim to have discovered the Holy Grail, but oftentimes these claims merely offer false hope to the desperate masses seeking easy money. Seasoned traders warn, for example, “Don’t trust anything you read or anything you hear.”
The general consensus is that most of the information out there about how to trade is suspect and that the only way you’ll ever separate the truth from the fiction is to try it all out and find out for yourself just what works and what does not. Seasoned traders also warn, “There are no universal rules for traders to follow. Conventional wisdom is only correct when it is correct (that is, it’s correct only under specific market conditions and only occasionally).
History only repeats itself when it does (and other times past market performance does not repeat itself). This lack of consistency in the rules of the market and in how the market behaves can be disheartening. It implies that one can study all available trading books and yet still fail to trade profitably and consistently. Many seasoned traders warn, “Trading is a profession where you should go in assuming you’ll lose more money than you’ll make.” Considering this advice, it is no wonder that novice traders have difficulty cultivating the right mindset.
Trading consistently seems difficult if not impossible. But it is still possible to overcome these limitations. First, it’s vital to remember that there are indeed actual traders who have studied the markets over years, made heroic efforts to build up trading skills, and eventually became profitable. You can’t turn a $5,000 online investor account into a fortune, but with the proper amount of startup capital, a state-of-the-art trading platform, and the right online broker, you can learn how to trade profitably.
Again, it’s just a matter of having realistic expectations, the proper training and mentorship, and the necessary experience to trade under a variety of market conditions. Second, the right attitude is also essential. Once you face the fact that trading isn’t easy money, or that you won’t become rich overnight, you’ll be able to prepare yourself mentally for the long haul.
It is merely accepting a few disconcerting facts about trading. If you know that you need a sufficient amount of capital to survive the learning curve and severe drawdowns, you’ll manage risk properly and live a frugal lifestyle in order to have as much trading capital as possible to invest. If you expect more losing trades than winners, you won’t be disappointed when you face losing trade upon losing trade. When you know that your seemingly foolproof trading strategy is bound to fail when the market conditions change, you won’t be very upset when it does indeed start to fail. By facing the cold, hard facts about the pitfalls of trading, you’ll neutralize them. Scary ideas are no longer frightening after you’ve acknowledged them.
The more you can identify the displeasing aspects of trading, and prepare for every possibility, the more likely you’ll be able to persist in the face of adversity. Trading is a challenging profession, but there are many traders who have met the challenge and have the winning track record to show for it. By meeting the challenge through hard work and dedication, you can also be a member of this small, elite group of winning traders.