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The Core of Trading: Proper Mindset + Validated System = Consistent Profits

The two core components for achieving consistent profitability in the market are the proper mindset and a validated system. These two essential components work together to provide the structure required in order to be successful within the unique market environment. Whether you consciously realize it or not, the market possesses specific characteristics that you’re probably not used to. Consequently, it requires adaptation and development of new attitudes, beliefs, and perspectives in order to be in harmony with it. Failure to align your mindset with market characteristics inevitably results in conflict, or in other words, emotional and financial pain.

Plasticity and Mindset Quote From Limitless By Jim Kwik

Most people assume that trading is all about strategies, systems, and market knowledge, but the most valuable edge comes from developing the proper mindset. One that is actually effective instead of ineffective. One that serves them instead of hurting them. You see, having a system that works is worthless without the internal control and discipline to execute that system. There’s no doubt that a faulty mindset can compromise even the best system. After all, the system is only as good as the trader executing it. If the trader is weak-minded, impulsive, and irrational, then results will be random, inconsistent, and negative. If the trader is patient, disciplined, and objective, then results will be steady, consistent, and positive. So it’s you who generates the consistency, not the system.

Breakdown of the 2 Core Components of Trading Success:

1. Proper Mindset That Aligns With Market Characteristics

The first step to trading success is recognizing that you’re in a completely new environment that requires personal growth and development. When your environment changes, the qualities that determine success change as well. You can’t control the market, so you better have control over yourself. Without self-awareness and self-control, you’re in for massive emotional and financial turbulence. So it’s time to calibrate your ways of thinking to align with the realities of the market. Choose to be the pilot of your experience instead of a passenger, otherwise the market will assume control of your directions and outcomes.

What is Day Trading Psychology

Your mindset predetermines your interpretations and reactions to events. For example, if you believe that the market owes you something because of your degree, job title, IQ, or any other reason, then you expect to make money on every trade. You earned it because of who you are, where you’re from, and your past successes. So even when trades move in your favor, you always expect more. And when they don’t, you get upset and angry. The problem with this mindset is that it’s not in harmony with market characteristics. The market is impersonal, which means it doesn’t care about you. Therefore, attaining an objective perspective is crucial.

Keep in mind that competence is highly dependent on context. Just because you’re not an expert in science, math, philosophy, music, geography, sports – you name the subject – doesn’t mean you’re stupid. All it means is that you haven’t committed yourself to learning and mastering that particular subject. So many people assume that their talents in business, medicine, law, and all kinds of other fields will automatically transfer into trading success. It’s true that certain qualities can help, but a substantial mindset overhaul is typically required. The dynamic, uncertain, limitless, and indifferent nature of the market environment requires a paradigm shift.

2. Validated System That Fits Personal Trading Preferences

Finding or developing a validated system requires limiting your field of vision, spotting patterns, thinking in probabilities, and creating rules to take advantage of these specific conditions, setups, indicators, and signals. It’s like constructing an environment that puts the odds in your favor, much like a casino does. Your system needs to have a positive expected value, or a statistical edge, in order to produce profits. There will certainly be losses along the way, but the expectancy of your system should work itself out over time.

What is a Day Trading System - Establish Structure in Your Approach

When it comes to trading strategies and systems, there are a number of factors that tend to knock people off course. One is that they don’t typically take the time to test and develop a system of their own. Because of this, they usually end up searching around for a foolproof system from someone else. Unfortunately, what they end up finding in most cases are false promises, distorted profit proclamations, and advertising gimmicks from gurus with systems that don’t really work. Maybe some of what these gurus teach is legitimate, but inexperienced traders end up relying too heavily on hot stock picks and trade alerts.

As a result, things go downhill fast. Failure to put the work in upfront to develop a validated system ends up costing them more in the long run. It’s the principle of least effort, I guess. Even when traders find or develop systems that honestly work, they have a hard time sticking to them. This inability to follow a proven system usually has to do with emotional gratification (instant vs. delayed). They trade against the guidelines and rules of their system by succumbing to fears, insecurities, denied impulses, and in-the-moment desires. But these emotional actions don’t allow their system to do what it was designed to do, thus damaging their long-term results.

Where the Majority of Traders Go Wrong – Focusing on the Result Instead of the Process:

Money is the primary focus for most traders. It’s usually what brings them into the market in the first place. It seems contradictory to say that focusing less on the money will actually bring you more of it, but it’s the truth. Being so heavily concerned with the result of every individual trade only distracts from the two core inputs required for success – mindset and system.  If those two inputs are strong and refined, then results take care of themselves. Constantly worrying about money will only serve as a distraction.

A critical concept to understand is that long-lasting trading success is not a lottery. The 10% of traders that actually achieve consistent profitability didn’t get to that point by luck or chance. They got there by growth and development in the areas of mindset and system. It’s possible for anybody to capture a huge profit on a single trade, but that doesn’t mean that their overall equity curve is steady and consistent. Without the proper mindset, any gains will inevitably be given back to the market. Sadly, about 70% of lottery winners go broke within three years because their windfall was pure luck. This wouldn’t be the case if they had the mindset and system necessary to consistently produce profits. It’s the structure of these two core components that produces consistent profits by design, not luck.

Trading Success Requires Synergy Between the Proper Mindset and a Validated System:

It’s my personal opinion that mindset is the most important aspect of trading, but consistent profitability in the market can’t be achieved without system as well. The two need to work collectively to achieve the desired result. It’s like having the proper mindset to get in shape, but no method to achieve it. Or buying a gym membership, but lacking the mindset to go. In either case, getting in shape isn’t happening. Both mindset and method need to be effective and aligned for success to be attainable.

A How to Guide For the Stock Market - Achieving Consistent Profitability

Regrettably, most market participants trade mindlessly, choosing short-term thrills over long-term profits. They might not consciously be making the connection between their improper mindset and negative results, but that’s usually the main source of their problems. Their fears and anxieties put them in a constant battle with the market. The non-stop judging, ruminating, and analyzing eats away at them emotionally. Luckily, trading doesn’t have to be this way if you don’t want it to be. You ultimately choose the experience you have through your attitudes, beliefs, and perspectives. In the end, your trading results come down to this: the expectancy of your system and your ability to execute it. It’s not easy, but it’s simple. Everything else is just noise in a seemingly random and chaotic environment.

Build a formidable structure (mindset + system) to protect yourself within the dynamic, uncertain, and impersonal market environment.

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).


  • Ann says:

    I have noticed this in my own experience. And it’s something that confirms that mindset is key. I started learning how to trade with money that was fictional. All was the same, but only the money wasn’t real. I applied all that I was learning. And I got to a point where I was consistently crushing it. Wao! I said to myself this is easy. So I jumped to using real money and after a week was in red numbers. What happened? My mindset wasn’t used to the idea of losing real money and I took desisions based on fear and not following strategy.

    • Matt Thomas says:

      I appreciate you sharing your experiences, Ann! Switching from a paper trading account to a real money account can cause drastic changes in our decision-making processes, and it’s all because of the feelings we attach to making or losing money. We tend to attach our hopes and dreams to the result of every individual trade, and when we take a loss, it’s not just our account that suffers – it’s our self-esteem.

      But this is no way to properly trade from a calm, balanced, consistent and objective state of mind. Strong emotional connections to money plague traders over-and-over again. It can be euphoric when we make money and depressing when we lose money, but being on that rollercoaster ride of emotions on a day-by-day basis is exhausting and unsustainable.

      That’s why mindset is so critical in trading. We have to gain personal awareness of our feelings toward money so that we can adjust our attitudes and perspectives so that they actually serve us while we’re operating within the market environment, instead of hurting us. Without an appropriate mental framework, we are highly susceptible to negativity and self-sabotage. No strategy or system will ever work for us without the right mindset firmly in place.

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