How Do Professional Traders Think?

By Bramesh | February 7, 2019

What are professional traders doing that you’re not? Do they know something you don’t? Do they have some ‘inside information’ or some top-secret trading system that you have yet to discover? I bet you’ve asked yourself these questions or similar ones many times, because trading success can seem like a bit of a ‘mystery’, even if you’ve been trading for years.

Most people enter trading with the idea that they are going to make a lot of money. In other words, they have high expectations.  There is nothing inherently wrong with that idea. In fact, we need motivation, and making a lot of money can be a great a motivator. Unfortunately, many traders also have low self-confidence. And are not profitable or not trading at the level they desire or are capable of.

This is a fairly common condition that can be expressed in the simple equation:

High Expectations + Low Self-Confidence = Poor or Inconsistent Performance.

As a trading coach, part of my work with traders involves changing the equation,

High expectations are replaced with a focus on executing one’s trading process

Low self-confidence is replaced with high self-confidence.

The new formula becomes:

Focus on Process Goals + High Self-Confidence = Better and More Consistent Performance.

Most importantly, professional traders understand that the market is only going to give them a certain amount of high-probability opportunities per month, and so it’s their job to scan the charts each day, as objectively as possible.

This approach accomplishes a number of things, and helps to operationalize what I mean when I talk about focusing on what we can control and letting go of the rest.  It is also a good example of one of my rules in action, that we must be rigid with risk but flexible with expectations.

Trading well over time requires that we control what we can and let the market do the rest. In other words, we control the risk and are flexible with expectations by accepting the fact that we must adapt to what the market is doing regardless of our wishes. When we do this consistently, we build self-confidence over time.

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