Having the right mindset for trading means, having the attitude that you’ll put as many things in your favor, as you possibly can. You can’t control the markets or even accurately predict what the markets will do. (How true this has been recently with the excessive volatility!) There are, however, certain things you can control.
If you really want to win in the long run, you won’t trade until you’ve put in order everything you possibly can. You need to stack the probabilities in your favor. What are your bottom line needs? Sufficient capital. Sound money management. High probability strategies including high probability entry signals and high probability exit procedures. Accurate and timely data.& Honest fills and reasonable brokerage. The steady, personal ability and willingness to do what needs to be done. The commitment and power to refrain from doing those things that work against you.
Being successful in anything means deciding what you want, understanding what it takes to get it, and being willing to pay the price to achieve it.
Are you having a problem with your trading? Sit down with a pad of paper and write at the top, “What is the problem?” When you can define the problem accurately, you’re halfway there. Sit with it for a while, and then ask, “What else is the problem?” Now you’re ready for the next question.”What is the solution?”
Is the problem insufficient capital? You may have to trade smaller, or stop until you can create and save enough money to trade.
Are you having trouble with money management? The absolute most you dare risk on a trade is 5%. Most advisors say don’t risk more than 2%. What is your reward to risk ratio? If you risk 50 cents to make a dollar, you’ll break even if you’re only right 34% of the time. Write down your money management and risk rules.
Do your entry signals give you the benefit of the doubt? Have you tested them in real time trading? Before you trade is the time for pragmatic pessimism. When you’re reasonably convinced the probabilities are in your favor, then you can trade with cautious and consistent optimism.
Do you have a valid way to exit with a profit and with a loss? Remember the exit is fully half the equation. Ask yourself if there is a better way, or an even better way to decide to close down a trade. You don’t want to experience capital death by a thousand stops, nor do you want to make money 99 times and lose it all on the last trade.
Do you have the best brokerage information and execution capabilities available? You owe it to yourself to make this right.
Are you in control of your own attitudes and behaviors when you trade? Remember that you, yourself, are the key to your success. It really all begins and ends with you.But that’s the good news.
I invite you to visit my website and read my books to learn more about how you can be the person you need to be to achieve your trading dreams.