Any trader who has been active in the market for some time will likely be willing to acknowledge that having the right mindset is one of the lynchpins to being a consistently profitable trader.
Mindset is underpinned by our beliefs - essentially what we believe to be true, is for us, true. So if you believe that money is the root of all evil, or that it’s selfish to accumulate wealth, then you could find it difficult to make money in the financial markets. Our unconscious minds seek to protect us from peril, in this case it would protect us from the peril of accumulating too much money. It’s easy to get trapped in by the shackles of a negative belief and not even know it.
In other words, we should be aware that our beliefs could impact on what we can achieve and indeed, whether we can become a consistently profitable trader.
If you are to trade successfully, a positive self-belief will be advantageous. However, when you’re constantly reminded that a vast majority of traders are unsuccessful, how do you convince yourself that you can be part of the minority who are successful, when you’re still learning how to trade? The answer is that you would need to generate a self-belief that you are or can become one the minority who do make money from trading.
Imagine that you are a novice racing car driver and are extremely talented. You have the best car and equipment, but the problem is you don’t believe you have what it takes. If you are racing against nine other drivers in a race who have strong self-belief, then you are unlikely to win. You might not push as hard, and you probably won’t take an opening that looks risky if deep down you doubt your skill to execute it - even if you are more than capable and have the skills to win.
Trading can be similar. You should believe that you can be an elite level trader, and that you are better than the majority who are not. So even when you’re new and still on your learning curve, you should maintain the belief that you can master and flawlessly execute successful trading strategies.
That is one of the keys. Even though you might not be achieving what you wish to right now, you have to believe that you can do so in the future. Don’t be sidetracked into doubting yourself by thinking you need to have graduated from Harvard, and worked for a large hedge fund. Keep in mind that there are many traders out there who dropped out of school but are still trading successfully from home.
So make sure when you are trading to maintain an insight into what you truly believe. If you realise that it is your own mindset that is holding you back, then you can do something about it. Once you realise your beliefs are incarcerating you, then you can start planning your escape by throwing down the shackles of negative belief.
When it comes to trading, persistence often pays off. If you believe that you can become a successful trader, then there is a better chance that you may. If you just keep at it, making some progress on a daily basis, then you could eventually reach your goal. Those who don’t have that belief tend to give up when they do encounter some adversity. Giving up is a mistake that you can’t rectify – it’s terminal. You have what it takes - you just have to believe in yourself.
By John Sheridan, Trade With Precision