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The Best Way to Make Money Trading Stocks is to Understand Yourself First:

There are three specific components of the trading equation (Mindset + System = Results), and unfortunately, most traders tend to focus on the wrong ones. When we first start out on our trading journeys, we’re often consumed by the possibilities of earning tremendous amounts of money (the result). That’s what initially draws us in. Then we turn our attention to locating a “foolproof strategy” in order to achieve that result (the system). But we barely, if ever, take the time to focus on the mindset component, which is an absolutely fatal mistake. Without the proper mindset firmly in place, we will only perpetuate the negative cycles of trading we’re currently experiencing, sabotaging ourselves over-and-over again due to our ineffective identities within the market environment.

What is the Best Way to Make Money Trading Stocks

The vast majority of traders don’t understand the critical impact that their values, beliefs, perceptions, and overall identities have on their trading results. But this underlying sense of self is exactly what drives their behaviors within the market, thus producing specific results. Typically, these results are inconsistent, erratic, and overall negative because they think and behave inconsistently, erratically, and negatively. In essence, the market is nothing more than a mirror that reflects our behaviors back to us. So if we want to experience consistent, fluid, and overall positive results in the market, then that’s the way we have to behave while operating within it. Doing so requires adjusting our mental resources to align with the true characteristics of the unique market environment.

Why a Paradigm Shift Needs to Be Made If You Want Long-Lasting, Positive Results:

There’s no question that most traders structure their operations in a way that puts their self-worth and happiness in the hands of uncontrollable factors. In other words, traders rely on expert analysts, trading gurus, or the market itself to fulfill their desires. They enter trades hoping and wishing that they work out in their favor, and when they don’t, they deflect responsibility to external forces. This lack of accountability always results in emotional and financial pain. By default, we can’t control the market (only a small number of individuals and institutions have the resources to do so), so if we lack the discipline to control ourselves, then we have absolutely no control at all. When we decide to take responsibility and upgrade our mindset, we gain our power back in the market.

follow rules quote from The Disciplined Trader by Mark Douglas

It’s critical that we put the spotlight on mindset because lasting change can only be made at the identity-level. The strongest drive we have as humans is to act in alignment with how we perceive ourselves – it’s hardwired into our brains. So even if we have a great system to follow, our compromised mindset will end up sabotaging our results over-and-over again. It’s not until we develop the proper mindset that we’ll experience the full potential of our systems. Replacing old, ineffective beliefs and perspectives with new, effective beliefs and perspectives will allow us to think and behave in harmony with the market. Focusing solely on our systems or results, while overlooking mindset, is like treating the symptoms instead of the cause – our problems will only continue to persist.

Over 90% of Traders Have an Identity Crisis – Current Identity vs. Desired Identity:

Current Trader Identity

Analyzing your current self is by far the most critical part of this process. Change cannot be made without awareness, and working through some of these questions will provide you with an understanding of the current attitudes, beliefs, and perspectives you hold that don’t align with your goal of being a consistently profitable trader. By knowing who you are at a deeper level, you’ll better understand what currently shapes your behaviors within the market. Be open to this experience of self-analysis because it will allow for growth and development in the future. Most traders take a superficial approach, which explains why over 90% fail, but this deep-dive into your own mental framework is the groundwork required put you in the relatively small group of successful traders.

Typical Trader Mindset

Now it’s time to define your current self. Take 5 minutes of uninterrupted time to write down as many “I am..”, “I am not…”, “I can…”, and “I can’t…” statements about yourself as you can think of. What are your strengths and weaknesses? Good and bad habits? What are your worries and fears? Are you disciplined or undisciplined? Organized or disorganized? Calm or impulsive? How do you feel about competition and potentially taking money from people with inferior trading skills? How do you feel about taking losses or being wrong? What stories from the past continuously play in your mind? Answering questions like this will give you an idea of what needs to change in order to be a better trader. Most likely, your current self isn’t capable of achieving consistent profitability in the market.

Desired Trader Identity

Defining your desired self is the second part of the process. What type of trader do you want to be? Do you want to be calm, balanced, structured, consistent, and profitable? What does this trader look like in your mind? How does it feel to be this trader? Imagine what it would be like trading your ideal system in an ideal mental state? What good habits does this trader have that you currently don’t? What bad habits doesn’t this trader have? Write down every characteristic this trader should possess in order to achieve your goals. This is the trader that you want to become. Now that you clearly know your current self and desired self, all you have to do is develop a plan of action that reinforces your commitment in becoming this new trader. The only thing stopping you is yourself.

The Enlighted Trader Characteristics

In small and achievable steps, you can start un-identifying with any attitudes, beliefs, and perspectives that don’t serve your ultimate goal of becoming a consistently profitable trader. You can also start identifying with the attitudes, beliefs, and perspectives of the trader you want to become. This will seem difficult at first because there is a clear conflict between your current and desired selves. Your current self is strong due to years of programming and conditioning, and will consistently tempt you to throw in the towel especially at the start, but it wouldn’t be valuable change if it wasn’t hard. Over time, as you continue to think, feel, and behave like the trader you want to be, eventually you will become that trader. This is the stunning power of neuroplasticity to expand your mindset.

Accept Your True Starting Point and Commit to the Process of Growth & Development:

This process of self-analysis can be used over-and-over again to identify and change any conscious beliefs that don’t align with your goal of becoming a consistently profitable trader. The more you do this, the closer you become to having a “shared reality” with the market instead of a “conflicting one”. As a result, your operations will be more fluid, smooth, and enjoyable, instead of jagged, rough, and afflictive. As stated previously, these changes will be hard at first, but eventually your new way of operating will become automatic. Keep in mind that these changes won’t just happen through pure desire and self-talk, it requires action as well. Changing your behavior builds proof in your mind, and your identity as a person that acts a certain way will only get stronger the more you repeat those actions.

Top Rated Trading Mindset:Psychology Course

A complete understanding of the importance of mindset in trading is something that the majority of traders refuse to learn about or outright resist, which is shocking since it’s the foundation of consistent trading success. They do so much worrying about the results at the expense of their mindset and systems. But if mindset and systems are strong, results take care of themselves. And any system will be fruitless in the hands of a trader with a compromised mindset. The bottom line is that we need to define our current selves, decide exactly who we want to become, and then prove it to ourselves through repetitive actions in a positive direction. The desire to become a consistently profitable trader without taking the steps to grow is like wanting a garden without planting any seeds.

Take full advantage of your potential to adapt and grow into a consistently profitable trader through the power of neuroplasticity.

Learn More in the Trading Success Framework Course

Written by Matt Thomas (@MattThomasTP)

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Matt Thomas

Founder of, Creator of the Trading Success Framework Course & Trading Paradigm Skool Community, and Intraday Futures Trader Using Auction Market Theory & Profiling (Volume & Market Profile).


  • Rick Hanna says:

    I have to disagree with you because I do not expect to make a living on my stocks. Perhaps if there were less fraud in the trading system more would enjoy investing. And it’s those small number of people that do have the control that makes it work in their favor. If you happen to be able to follow their stride you will do well.

    It has been proven that mutual funds outperform stocks all the time because it’s based upon a bunch of stocks and when the small few decide to change the stocks so they can make more money it doesn’t affect the mutual funds as much because those that sell must invest in some other place.

    I have played some with the stocks and to be honest it’s not worth it for me. I do agree that most who try their hand at stock trading goes in believing they will make a lot of money because of what they heard. 

    For me I will only invest in the stocks that I know the company which is still not as safe as mutual funds.

    Very interesting read I must say. I am off to read your day trading article, that sounds interesting.

    • Matt Thomas says:

      Hi Rick – I appreciate your comments! I’m not so sure we disagree as much as you might think. It seems like you’re mixing trading and investing together as just one thing, but they’re separate approaches. Generally, short-term traders are focused on taking advantage of volatility within days or weeks – sometimes months (and that’s not just to the upside – it can be to the downside too). The main focus here is usually technical analysis. With long-term investing, however, the focus is typically on value, fundamental analysis, and hold times over a year (or even a lifetime). In regard to investing, I agree that most professional funds and amateur “stock pickers” fail to beat the market, especially over a ten year period. I sort of agree with the mutual fund thing you mentioned as opposed to picking individual stocks (for the diversification), but I personally prefer index funds (usually cheaper than mutual funds). Here are my top 5 principles for long-term investing.

  • Boi says:

    I have always been interested in making money online, particularly in the stock market and have been clueless on the how part. There are so many confusing articles about this subject on the internet and today I must say it has been a blessing to come across your site.

    I like it when you say before making money on the stock market, you have to understand yourself first. I am one of those people who were taken away by the idea of earning tremendous amounts of money and as a result I lost a lot. I indeed learnt the hard way. However, I totally agree with you that it starts with my mindset first.

    Following the rules is also very important. I agree with Mark Douglas statement that says “As a trader it is more important to know that you will always follow your rules than it is to money, because whatever money you make, you will inevitably lose back to the market if you can’t follow your rules.”

  • Kevin says:

    I love the equation for trading success. The results from trading stocks definitely come from your mindset plus your system. I think my dad needs the Trading Composure School program. I keep telling him that making money from stocks really comes down to his mindset and system, not luck. Do you know what type of trading Yvan Byeajee focuses on (e.g. day trading, value investing, growth, etc.)?

    • Matt Thomas says:

      Hi Kevin – great question. Yvan has short-term trades (day and swing trading) and he also has long-term investments. One of his day/swing trading strategies is with SPY options – and he shares the details of that strategy in his Trading For a Living course. He takes his profits from short-term trading to put into long-term investments from what I understand – he’s mentioned that before either on his blog or Twitter if I’m remembering correctly.

      But he doesn’t openly share all of his trading/investing strategies because it’s not really about that. Systems/strategies aren’t always one size fits all, and his edges (specifically with short-term trades) can go away if too many people were to know about them. Sharing them also sort of promotes a copy-cat/blind mirroring approach, which doesn’t typically lead to trading success. There are tons of services out there that offer “foolproof strategies” and “hot stock picks”, but they don’t often work for subscribers – and one of the main reasons is the mindset factor. The proper mindset that aligns with the realities of the market paired with validated systems that fit personal trading preferences is the recipe for trading success.

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