The point of today’s lesson is essentially that you need to change the way you think about trading. The simple mindset ‘hack’ I alluded to in the title is that if you want to succeed at trading, you must be realistic and stop trying to get rich fast.
Trading can offer you the world, but the more you feel you ‘need’ it to work, the less likely you are to succeed. When people start feeling desperate or like they ‘need’ to make money in the market, they start doing all kinds of things that lead to their failure. They start trading too big of position sizes for their accounts and skill level, they start trading too much, and they just turn into trading addicts. Be realistic, be honest with yourself and start small and slow and work your way up as you learn, build confidence and improve your abilities.
If you apply the ideas put forward in this article dramatically reducing position size (even if temporary) and commence the mindset re-training regime I put forward above, then over time it’s going to become fair easier to look at a chart, spot a signal and pull the trigger with a stress-free and confident mindset. This is where you want to be, it’s where I am and it’s where you can be with true dedication and discipline. You may not make $1 million in the next year, but you will certainly be acting and thinking like the top 1% of traders, and that’s a great place to be, the world is then your oyster and you can build upon that foundation. Aim for one win at a time and don’t become mentally attached to your trades (be ok whether they win or lose). Get to a point where you can execute trades confidently and leave the trade alone. You need to get these things right because they are the real ‘keys’ to trading success, 16+ years trading and almost 10 years teaching traders has proven to me this is a fact.
In my opinion, the most useful and relevant comment made by Nial in this article is:
“Subconsciously, many traders are simply trading for entertainment (gambling) and have not yet learned to treat trading like a business.”
It is precisely this recognition that one’s trading is a business, and to treat it as such, that starts to make all the difference between success and failure.
And that process of running your business should already start with one’s demo account. For example, if one is not watching calendar events that affect one’s demo trades or finds demo trades accidently still open, then one is not really preparing oneself for live trading at all - in fact, they may well end up with a totally false sense of their abilities.
Nial has written another article which handles this issue and a link to it is contained in the article above posted by @anon58863749. It is a good start to what should be - has to be - your attitude towards your trading business.
There is always a risk associated with any type of business, that’s why prudent people always prepare a business plan before starting any business. And then they monitor and compare the performance of it according to their business plan. They also check the financial health by analysing the Financials statement of their business on weekly or monthly basis.
On the other hand, we all know that the trading is a riskiest business. But, how astonish that most of the traders don’t take it seriously rather they enter in the trading arena with their hard earn money with the mindset of a gambler without any basic education, preparation of a trading plan, lacking disciplines and emotional control.
In my opinion, there is a vast difference in a prudent trader and a foolish/gambler’s approach and that is because one take Calculated risk whereas the other take Uncalculated risk.
And they do it just because of the bias that “Forex trading is type of a get rich quick scheme”.
While I am new to trading in the last two years, I have put my screen time in, I am a funded trader that is continually looking to the way of the subconscious decision making of why I did that.
This thread is all so important to consistently profitable trading but I think it will mainly go unnoticed as not being sexy enough, In reality, it is the heart of a trader.
The top 1% of traders are not tradingat home for themselves. They are trading large bank or hedge fund accounts. losing makes no difference to them for it is not their monwy they are losing. Hence they get paid regardless
I would say trading with other people’s money may take the psychological detriment away from the situation… For me if I was trading with other people’s money it would compound the negative psychological effects.
as for not caring about losing… I think their job depends on them being profitable. I can’t imagine it hedge fund keeping a trader on who was not profitable.
I trade other people money and I can tell you it is to me more stressful than my own when I have losers. Makes you really get into the nitty gritty of trade management or rather cash management, risk management and sizing.