Many traders are simply putting in the hours, thinking that if they spend enough time around the markets, analyzing charts, reading books and studying courses, their skill level will improve.
“Putting in hours” is necessary when you are starting out, as there is a lot to learn. But putting in hours won’t necessarily increase your profit potential. If you always do the same thing and make the same mistakes, putting in the hours will just ingrain those habits even more. To improve, make repeated and deliberate choices.
How to become a profitable trader has far more to do with mindset than with a specific trading strategy. In fact, no trading strategy can be profitable if a trader has the wrong mindset.
Today we will discuss How traders can optimize their trading mindset
This really is the kind of principle that should play a role in every major endeavor you undertake. When you set out on a new path, it helps to set clear, definable goals to guide you. If you set no goals at all, or vague goals, you don’t have anything to benchmark against. Clear goals help you stay the course on the road to success. Make Realistic Goals not unrealistic goals like doubling trading capital in a month. Read more on Setting Trading Goals
Have a Realistic Expectations
This second principle goes hand in hand with the first. Many beginning traders do set goals, only they’re not very realistic. Setting the goal of making 10,00,000 annual profit with a trading capital of 1,00,000 is very enthusiastic, ambitious and optimistic – all very likable qualities – but these goals are mission impossibles. And since failing to reach a goal is very demotivating, there’s really no reason to set goals that are ridiculously hard to achieve.
To make sure you set realistic trading goals, you should answer the following questions for yourself:
• How much money can you trade ? Your financial goal is partially based on the amount you have available for trading.
• How much time can you devote to studying? The more time you can spend on expanding your knowledge, the more trading strategies you can explore and master. Learning about different trading strategies and techniques will increase the chance of finding a strategy that really suits you.
• How much time can you devote to trading? Answering this question will help you cross out a number of trading strategies. For instance, If you have a full time job which allows for only about an hour of trading each day, you don’t have to bother with intraday trading.
Every successful trader will tell you that the most challenging aspect of trading is keeping your emotions out. It’s hard to stay in trades that have a lot of unrealized profit, just as it is hard to close a trade that is moving against you. It’s hard to keep believing in a trading system that hasn’t delivered for some time, and very easy to start doubting everything you do.
You have to do everything you can to limit the temptation of making emotional decisions, and of the most important steps you can take to that end is to find out
- What kind of trader you are.
- What kind of trading personality do you have?
- Are you impulsive, (relatively) good at taking a loss?
- Are you patient, disciplined, do you believe the natural direction of a given stock is up?
To be Continued