Hello folks, today I wanted to talk a little bit about the trading mindset. This discussion has nothing to do with trading strategies or tips. As we all know, 90% of traders fail. So, we have two choices to succeed in trading: study the large 90% group and do the opposite of what they do, or replicate what the other 10% do. I've been thinking about what makes the 10% so highly successful. Here are the key differences.
1. Assume You’re Always Wrong
The first rule successful traders follow is assuming they are always wrong. This mindset shift is crucial. When I enter a trade, I first think about the risk associated with it. How much am I willing to lose? Initially, I focused on potential profits, but changing my perspective to consider potential losses helped me manage my capital better. Successful traders prioritize protecting their capital over making big profits. They believe they might be wrong, which keeps them cautious and disciplined, avoiding overconfidence and ensuring proper risk management.
2. Expect to Be Uncomfortable
Successful traders expect to be uncomfortable. Trading can cause anxiety, especially when a trade isn’t going your way. There are two types of people: those who can't handle the anxiety and bailout, and those who manage it and stay in the game.
When entering a trade, successful traders don't make assumptions—they trade what they see, not what they think. This approach allows them to follow trends and let profits run, even if it feels uncomfortable. For example, when I started trading, I would quickly take profits as soon as I doubled my investment. However, to be successful, you need to ensure your gains outweigh your losses, which means letting profitable trades run longer, despite the discomfort.
3. Never Add to a Losing Position
The third rule is crucial: never add to a losing position. If the market moves against your trade, successful traders cut their losses and move on. They don’t throw good money after bad. However, if the trade moves in their favour, they might add to their position, reinforcing a winning trade. This approach requires a strong belief in the trend and the discipline to accept losses and avoid chasing them.
Developing a Winning Process
Ultimately, the idea is to follow a well-defined process and not worry about the results. Successful traders develop a process tailored to their skills, abilities, and mentality. They refine this process continually, journal their trades, and adjust their strategies as they learn. By following their process to the letter, they allow the results to take care of themselves.
Everyone's trading process will be different, but the key is consistency and continuous improvement. Successful traders understand that losses are part of the game and that managing those losses is crucial. By focusing on the process rather than the outcome, they can maintain discipline and improve over time.
In conclusion, success in trading isn’t just about having the right strategy or the latest software; it’s about developing the right mindset. By assuming you’re always wrong, expecting discomfort, and never adding to losing positions, you can adopt the habits of the top 10% of traders. Follow your process diligently, refine it continuously, and let the results follow. Happy trading!
Comentarios