Being Good at Market Research and Analysis Won’t Necessarily Make You a Good Trader:
There’s no question that most people have distorted views about what it takes to be a consistently profitable trader. They think the most important aspect of trading success is being exceptional at market research and analysis, which will then allow them to predict exactly what will happen next. And while these efforts can certainly help them have higher forecasting accuracy than the average person, the reality is that they will still be wrong a lot. But after pouring so much time and effort into analyzing the market, it gives them a false sense of confidence and an increased need of being right. Consequently, the possibility of being wrong is oftentimes unprepared for, which can be a catastrophic mistake within the uncertain and unforgiving domain of the market environment.
The truth is that the market won’t fulfill your wants and desires just because you feel like you “put the work in”. If you think the market owes you something because of your degrees, accomplishments, or IQ, then you’re in for a rude awakening. The characteristics of the market environment are completely different from what you’re probably used to, and as a result, it requires adaptation. In order to align your attitudes, beliefs and perspectives with the realities of the market, a paradigm shift has to be made. For starters, your current views on failure, perfection, and hard work most likely have to be unlearned. Because of the way society has conditioned you in regard to failure and perfection, you probably want to avoid being wrong and taking losses at all costs, but these exact attitudes will sabotage you within the market environment. There’s no possible way to avoid losses completely, so controlled losses have to be embraced.
Understand True Market Characteristics and Why You Must Align Your Mindset With Them:
As much as market participants tend to yell obscenities at their computer screens and blame the market for their trading woes when things don’t go their way, the truth is that the market isn’t out to get them. It doesn’t care about you, or me, or anyone else for that matter. It’s completely indifferent. It’s not out to hurt us nor comfort us. All it does is provide feedback in the form of information (price action, volume, etc.) and the way we choose to perceive that information is entirely up to us. If you choose to perceive certain market movements as “bad” or “threatening” – that’s your choice, but all you’re doing is fighting the market. On the other hand, if you choose to perceive market movements from an objective point of view, you create the conditions necessary to flow with the market instead.
When you decide that the market is completely indifferent to you, then you can stop blaming it for your trading problems. And when you stop making excuses and attributing blame to external forces, you give yourself the power necessary to succeed. Most traders fail because they immediately relinquish their personal power upon entering the market environment. But you don’t have to share that fate with them because now you know better. Once you take full responsibility for your trading operations, you have to establish structure and discipline for your own protection. Again, the market isn’t concerned about hurting nor comforting you, so it’s up to you to devise your own set of frameworks to avoid being hurt (by taking controlled losses) and obtaining comfort (by taking profits).
The One-Two Punch Required For Consistent Trading Success – System & Mindset:
There are basically only two core components required in order to achieve consistent profitability in the market: 1) a validated system, and 2) the proper mindset. Creating and consistently improving these two essential elements are the actions that matter for your trading results – everything else is just noise. They’re the critical inputs (system and mindset) that produce the outputs (profits/losses).
1. Validated System Based on Your Trading Preferences
Your system is a quantifiable edge in the market. In other words, it’s measurable and repeatable. Most traders tend to jump from strategy-to-strategy, acting impulsive and random, and then expect phenomenal returns. But that sort of inconsistent approach isn’t repeatable. Without a system that defines your “tradeable universe”, there’s no structure in place to not only control your behavior, but also be able to measure the expected return of your system, and refine it over time. Trading chaotically can certainly produce a huge win one or two times by pure luck or chance, but how can you repeat those winning trades in the future when you don’t have a clear understanding of how you did it? It’s not one big trade that matters, but rather consistency that lays the foundation for mastery.
It seems paradoxical, but two of the main concepts that you need to understand is that: 1) anything can happen, but 2) you don’t need to know what will happen in order to make money. When you truly accept that anything can happen, that means you fully accept the uncertain nature of every individual trade you take within the market environment, so you must have risk management measures in place in the event of unfavorable results. But over a large number of trades, however, you can develop confidence and trust in your system to produce profits for you, assuming it has a positive expectancy. So with an understanding that anything can happen – you know the importance of protecting your downside on every individual trade, and with an understanding that you don’t need to know what will happen in order to make money – you can fully concentrate on the execution of your system with conviction.
2. Proper Mindset That Aligns With Market Characteristics
The proper mindset is the glue that binds together your trading operations with self-awareness and self-control. With the wrong mindset, you’re highly-susceptible to numerous trading errors that will demolish the integrity of your validated system. With the right mindset, however, the execution of your validated system flows effortlessly and without hesitation, allowing your system to do exactly what it was designed to do. As critical as your mindset is as a trader, it’s an aspect that oftentimes gets completely ignored, or at least largely overlooked. People love to repeat the old ages like: “buy low and sell high” and “cut your losses fast and let your winners run”, but those simple sayings, while correct, don’t provide traders with enough information for real-life, practical application.
These surface-level sayings are about as deep as most stock trading educational services go on the topic of trading psychology, which is probably why many of them aren’t nearly as effective as they potentially could be. The reality is that almost every single person entering the market environment for the first time is ill-equipped to do so. The attitudes, beliefs, and perspectives that you must adopt in order to be successful aren’t something you can just be born with. In fact, you most likely developed a number of conflicting attitudes, beliefs, and perspectives throughout your life that will only work against you within the market environment. Thanks to years of prior conditioning, it takes real effort and dedication to go from the person you are right now to the trader you want to be. And the bottom line is that you’re not currently capable of achieving consistent profitability until you make the appropriate paradigm shift.
#1 Trading Psychology Course Available to Support Your Personal Transformation:
The Trading Psychology Mastery Course Offered at Trading Composure |Read Review & View Course Content|
In my personal opinion, The Trading Psychology Mastery Course is the top trading psychology program currently available online. Throughout the course, you will be provided with practical tools to combat your biases, insecurities, defense mechanisms, denied impulses, bad habits, and unrealistic expectations. Your old attitudes, beliefs, perspectives and behaviors simply won’t serve you within the market environment, and this course provides the framework for replacing them with an objective, balanced, patient, and disciplined mindset. Overall, The Trading Psychology Mastery Course can take traders from a beginning state of not knowing what they don’t know (unconscious incompetence) to an end state of mindset mastery that is second nature (unconscious competence).
APRIL 2021 UPDATE: NEW #1 RECOMMENDATION – The Advanced Traders Mindset Course
As solid as The Trading Psychology Mastery Course is at helping traders develop an effective trading mindset, however, it’s one of the few legitimate trading psychology courses I’ve come across in nearly eight years as a trader. This is an unfortunate set of circumstances for practically all traders because the main reason why they’re struggling to become consistently profitable, whether they realize it or not, is because they lack the appropriate mindset for the environment they’re operating within. Everywhere they turn is a new “hot stock pick” or “foolproof system” to distract them, but nobody ever mentions the importance of mindset. As a result, most traders unintentionally put themselves through substantial emotional and financial agony learning the hard way. Luckily for you, if you choose to build the proper foundation first, you can avoid that unpleasant path by taking full advantage of this course.
Anybody can learn various systems and strategies, but then it comes down to execution – and you need the proper mindset for that.
Learn More in the Trading Success Framework Course
Written by Matt Thomas (@MattThomasTP)
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