There are plenty of trading books and programs out there that will advise you on the technicalities of entering and exiting trades. You will find plenty of strategies for spotting profitable opportunities, some better than others. There is also no shortage of books that will give you tips on how to track your performance and avoid classic pitfalls like overtrading, breaking your trade plan rules or how to approach risk management, but what if you’ve already read those classic trade psychology books?
What if the real missing link is not so much what to do as how to think? Trading is a career path like any other and to excel at it requires adopting the right frame of mind, something we don’t often see addressed directly in most online programs/courses. Read on to learn more about the mindset of a profitable trader and how adopting this mindset can improve your performance beyond measure and help you on your way to finding consistent profitability and funding.
Successful Traders Aren’t Afraid of Losing Trades or Money
One of the biggest mistakes traders make is being too afraid of losing their money through losing trades. You should have the mindset that you are willing to lose what you’re risking per trade because especially in the early stages, you will take losses! Losing money on trades is just a cost of doing business. Losses are inevitable, so there is no point in stressing over them as long as you’re sticking to your trading plan. It’s the same as any new business venture attempting to get off the ground and become profitable. For instance, most new business ventures require about 18-24 months before they even begin to reach profitability! This isn’t to say that your trading will result in a similar way, but be sure to maintain proper, healthy expectations going into your trading journey.
Don’t be discouraged when you aren’t making millions in your first few months. It’s not realistic. Time and capital investment is required to learn trading skills, gain experience and become better. Losing positions here and there can be viewed simply as business expenses… the costs of doing business. If you don’t accept this truth and instead take early losses as failures and make them mean something about you, you’ll have a difficult time. You will make mistakes. That’s inevitable. It’s part of the learning process. What matters most is how you handle them and what you take away from those L’s as you go along.
Successful Traders Are This For The Long-Term, Not To Get Rich Quick
Winning traders don’t enter a trade with the idea of making a quick buck and then getting out as soon as possible, no matter how promising the situation looks. They are in this for the long haul. They don’t care about the daily fluctuations in their account because they understand that to make profits you need to be in the game for the long run. This isn’t about being stubborn and refusing to get out at a profit. It’s about having the right mindset and choosing the right trades consistently over time. Things that happen on a daily or weekly basis don’t matter. Over a large enough sample size of positions, your edge will play out and your account balance will climb.
Traders that let themselves get swept up in the emotions that come with wins and losses on a day by day basis are those who tend to get frustrated and end up in loss streaks. You want to zoom out and remain in an abundance mindset. Every day there are new opportunities available to us on the charts, we simply need to remain conscious of this and be in a good, clear state of mind to effectively execute on what’s presented to us. Over the course of a month, you’ll find that the wins outweigh the losses once you’ve gotten the knack for the strategy/style you’re trading and your mindset is dialed in. Get in the habit of zooming out when you feel frustrated or that you’re not progressing as fast as you’d like to be. Know that life is long… and if you commit yourself to trading and continue to practice and refine your edge and your mindset, it becomes inevitable that the success you’re after will manifest.
Take a step back and remind yourself that you’re on a journey and that you’ve progressed a great deal since first starting. Simple reminders like this can help you get back into a healthy mental state that allows you to be effective and continue to show up.
Successful Traders Have The Discipline To Journal Trades Consistently
One of the most common reasons traders struggle with consistency is because they lack self-discipline. They might be fine while trades are going their way, but when they hit losing streaks or take big losses after violating their plan, they fail to continue executing their processes they’ve developed. To be consistently profitable, you need to track your performance by journaling all of your trades.
You need to know if you have a winning or a losing position and collect data on why you entered the setup in the first place. You also need to know the amount of profit you’ve made off of any given position. If you don’t feel like you have the discipline to track all your positions yourself, you can always use a trading journal app to keep track for you, but that will only get you so far.
All of that aside, it’s also very important to consistently show up to the charts day in day out and to train yourself to approach the markets in a neutral state of mind despite whatever has happened over the days and weeks, months prior.
Successful Traders Don’t Panic When Trades Go Against Them
The markets will do crazy things from time to time. You will have times when everything goes against you and it seems like you can’t catch a break. This is when you need to stay calm and not become irrational. This doesn’t mean you should sit on your hands and do nothing. You should continue to hone your skills and develop your edge to account for the new learnings. But you need to be rational about this and not let your emotions cloud your judgment.
Better to make a few adjustments that bring your trading back in line than to throw the baby out with the bathwater and abandon your strategy and trading entirely. Your ability to develop grit and stick-to-itness will determine the results you experience in your trading journey. Most people give up far too early to ever witness profitability let alone consistent and reliable profitability. Nothing worth having comes easy.
Most things in life that are uncommon and noteworthy are those that you have to work hard at and a long time for. Maintain your composure, get back to work and seek out help when you need the help! It’s the same process for developing any skillset. It’s repetition and learning from those who are further along the same path as you. Seek mentorship, get the support you need and keep showing up and practicing. Before you know it you’ll be where you want to be with your trading.
Successful Traders Maintain Healthy Habits Outside of Trading
Finally, you need to make sure that you don’t get too caught up in the moment and forget to take care of your mental and physical health too. Trading can be stressful, but it can also be very rewarding. You need to be sure that you’re taking the right steps to keep your mind healthy and not letting the stress of the job get to you. If you can do this, you should be well on your way to becoming a profitable trader.
Keep in mind that success in trading takes time and effort, so don’t expect immediate results. Be sure to eat well, stay hydrated, get regular exercise and take time away from the screens to rest and relax. While it may be fairly obvious advice, you’d be surprised just how many people try to forgo these basic human longevity practices and instead force themselves through long work hours only to become burnt out and make poor decisions at the charts. Be patient, follow the tips above consistently and you should see significant progress over the long run.
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If you’re eager to succeed in your first year as a trader, and if you keep these five things we’ve covered above in mind, you’ll be well on your way to becoming a successful trader faster than most. We hope this has been valuable for you and has helped clarify what your first year will look like as a trader.
Robert Castillo
@coldwaterfx
FX Trader & Analyst
Writer & Editor
Rob is a funded trader from Toronto, Canada, and has been trading currencies, commodities, stocks, and cryptocurrencies for over 7 years. Outside of trading, he enjoys making music, boxing, and riding motorcycles.
