If the Answer is No, Then Stop Trading With an Ineffective Mindset:
For the majority of traders, the entire process quickly becomes excruciatingly painful – both emotionally and financially. What starts out as a fun and exciting way to “get-rich-quick” rapidly turns into a nightmare. There might have been a streak of beginner’s luck where you stacked up some random wins, but that luck has run out. Your account is basically blown up. And now you have no idea how to get back the money you’ve lost except to take on more risk, bet bigger, and hope for a huge win. Before you know it, you’ve lost thousands of dollars, you’re angry at the market, and blame the “guru” that sent you the “hot stock tips”. Any of this sound familiar?
This is the typical experience of a new trader. They enter the market with bright eyes and high hopes, but then reality eventually sets in. It’s no longer the fun and games that they wanted it to be. They’ve lost a large chunk of money, they’re emotionally wounded, and not entirely sure what to do next. They blame outside sources for all of their trading woes and continue to search for external answers. But the bitter truth is that there’s nobody to blame except themselves. The market never took anything from anyone. It’s completely objective and indifferent. All it does is provide information. If you lost money, it’s because of actions you took. So it’s time to develop a sense of self-awareness and personal responsibility. Your current thoughts, beliefs, perspectives, and behaviors within the market are what led you to the position you’re in now. If you want different and more effective results, it requires a complete paradigm shift.
Understand Why Your Current Mindset is Sabotaging Your Trading Results:
The worst part about seeing the vast majority of traders fail is that oftentimes they don’t even realize the actual reason why. They think the consistency they seek can be found somewhere outside themselves – some outside force. As a result, they follow the crowd in a constant search for some magic foolproof system. But the reality is that trading systems without any losses simply don’t exist. There’s too much uncertainty in the market for any guarantees. And even if they did come across a close-to-foolproof system, they most likely don’t have the proper mindset in place in order to take advantage of that edge with a high degree of discipline, so the system wouldn’t work regardless. The unfortunate truth is that we all have insecurities, denied impulses, biases, bad habits, unrealistic expectations, and defense mechanisms that we tend to bring into the market because we don’t know any better. So without the proper handle on our mindset, all of these factors push us down a path of erratic, impulsive, and irrational trading behaviors.
The reason we need to shift our beliefs, perspectives, and behaviors within the market is because it’s a unique environment. Again, most traders fail to realize it, but the characteristics of the market environment are fundamentally different than anything else that they’re used to in their typical day-to-day lives. We’re born into societies with structure already in place for us, so it’s not even something we consciously think about. There are rules and laws that we follow that just seem natural. We didn’t have to put in any effort of our own to construct these guidelines, but there they are – already in existence for everybody’s well-being. The market environment, however, is completely different. There’s nothing stopping us from taking random trades, removing stop losses, adding to losing positions in direct conflict with our original plans, and the list of impulsive behaviors goes on-and-on. The possibilities are completely limitless. So in order to be consistently successful, it’s entirely on us to create structure for ourselves with rules-based systems and calm, balanced mindsets. Without these components firmly in place, the market environment is nothing but confusion and chaos.
Learn How to Align Your Mindset With the Realities of the Market Environment:
It’s clear that the majority of traders behave based on their fears, anxieties, regrets, doubts, and worries. There’s an agonizing internal struggle due to their constant questioning and second-guessing. Should I take this trade? Is my position size right? Should I exit? Will I miss out on other trades? In order to reduce their never-ending anxieties, they take impulsive and irrational actions. This happens because there’s a dissonance between the personal thoughts, beliefs, and perspectives they have toward the market and the actual realities of the market. Once their mindset is truly aligned with the realities of the market, however, it becomes possible to flow with it instead of fight it. This is how our trading experience can become fluid and smooth instead of erratic and painful.
If more traders focused on cultivating the proper mindset before jumping headfirst into the market, there would certainly be a lot less emotional and financial pain. Unfortunately, most traders choose to learn the hard way. Either out of ignorance or denial, they end up experiencing for themselves how cruel the market environment can really be and the psychological implications that it can have on an unprepared participant. The good news is that these hard lessons can eventually lead them down the right path of changing their mindset. But it doesn’t always have to be this unpleasant. So much pain could easily be avoided if traders just accepted the realities of the market and embraced them from the start. But in order to be effective within an environment with unique characteristics, it requires change. And change is scary for most people, but without a little resistance there can be no growth. We have to take action knowing that the process won’t be perfect, but eventually we’ll develop mental qualities and skills that will serve us much more effectively within the market environment. Ultimately, we are individually responsible for our own trading results.
The proper mindset isn’t nice to have – it’s essential. It’s the foundation for consistent profitability. Cultivate it or continue to struggle.
Learn More in the Trading Success Framework Course
Written by Matt Thomas (@MattThomasTP)
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