Do you ever TRULY focus on why 95% of people lose money trading?
There are an immense amount of reasons why this is such a valid and powerful recurrence.
From the very first moment of its existence, trading has always seen large number of losers and a small number of winners.
In this article, we will concentrate our attention on one of the main elements that cause such a gap between the counterparts: Mindset.
Everything about this component is at the fundaments of one’s success or failure.
Let’s spot 10 signs that indicate you are proceeding with an efficient mindset.
1. You’re not in need of trading, but in need to be successful
A lot of traders seem to have lost the very purpose of what they’re doing. They trade because they have transformed their desire to acquire wealth into a vice of trading, and in some cases, they are unaware of suffering from a form of gambling disorder.
Are you one of those traders who was making better money when he was a novice compared to now? That could be a very sign that you have lost your orientation, and that you switched your initial desire for money to the desire to trade.
An efficient mindset is never focused on mere trading, but on acquiring wealth and preserving it. This means that the conscious trader stops trading when it is needed, and he can do it effortlessly.
The efficient mindset of a trader never mistakes the mean for the purpose. Trading is a vehicle for wealth. He does not feel the absolute need to trade. He has a strong desire for success, and he uses trading as a means for it.
If you feel you’re suffering from a trading addiction, please take care of yourself and regain control over your life.
2. You stick to your well-developed strategy
Do you snob the strategy you’ve developed from the pain of your labors and studies?
A well-developed strategy, accompanied by a strong discipline that makes you stick to it, is enough to take advantage of the opportunities it shows. If you can’t spot any useful opportunity with your strategy, you may want to change it or fix it.
There is no good trader without a good strategy, but the best strategy in the world is making no profit in the hand of a bad trader. This is first because a bad trader is not disciplined enough to stick to a strategy.
An efficient mindset is focused on fixed rules and principles, developed by the analysis of past events, realities, and analogies, and by the experience of mistakes and good profits.
The successful trader sticks to his well-developed strategy because he has suffered enough to come up with it, and he knows that it can and will provide other opportunities. He just needs to be as disciplined as a robot.
3. You make decisions free from any emotional influence
This is probably the most important of all qualities that a human being can develop, thus the most ignored and misinterpreted.
Emotions are the cause of loss for most of the traders, and those who know how to control them surely do not fall into the trap of those who stimulate them.
A highly emotive person is going to regret the day he chose to invest and trade, because he is not aware of the true dynamics of the process, and his weakness is going to be overcome by the strength of disciplined traders and investors as well as by nature itself.
We can say that trading is somehow meritocratic, since correcting a destructive attitude is going to pay, but persisting in being weak is going to demolish any expectation of wealth and success.
The conscious trader, provided with an efficient mindset, knows that whenever he is emotionally unbalanced, he must turn off every monitor and go reset himself. He is perfectly aware that every decision taken from an emotional impulse, is a bad decision.
4. You don’t force trades
How many forced trades can be successful?
It is incredible how forcing trades leads to a loss almost every time. Any trader that has forced a position on some occasion can testify for it.
When a trader is convinced that forcing a trade can be profitable, he has entered the realm of gambling. Trading is not gambling. Bad trading is gambling. Those who associate these two different matters have a semi-distorted view, that makes them think profitable traders are mere lucky folks.
When one is not sure of what he is doing, he tends to force trades. The difference between a gambler and a trader solely relies on this concept: being sure of what one is doing, which means having confidence in his craft.
A good mindset in trading implies the discipline to make trades only when there is a solid reason behind it, and it rejects any gambler instinct. A trader that is sure about his knowledge never forces anything, because the reasons are always very clear.
5. You find the strength of losing little
Everyone can be wrong. No best trader in the world has ever been wrong.
The secret is not to be always right, but to understand as soon as possible when the trade is bad and how much it is, and close it.
The common instinct is to keep staring at a losing position and to prematurely close a winning position. It should be perfectly known that in the environment of trading “common” means “bad”.
Being stuck in a trade is one of the worst things that can happen because TIME is the most important asset. A losing position steals you money and time, that you are spending waiting for green.
The good trader knows that when he is wrong he must accept it. He acknowledges the value of time and he does not risk being stuck forever into a trade he could have closed with a little loss. Being efficient means reducing to the minimum the negative impacts.
Find the strength of losing little instead of waiting for green and losing more.
6. You keep yourself away from mainstream news
This is very, very true for all traders, especially those who rely mostly on technical analysis of any kind.
Most of the news is for those who are supposed to lose. No single profitable trader has made his fortune from news unless they are so rich to actually make the news.
Does anyone think that getting information from a source directed to a large number of people will give you profitable opportunities?
Let’s get back to how much people lose money trading: at the worst, 95%.
This percentage is enormous. Anything that is meant to reach such an amount of people is not intended to change the % value for the good.
It is also not wise to say: “well, I guess I’ll do the exact opposite of what the news seems to encourage”.
The wise trader, which has developed the right mindset and directed it to his success, knows that everything is perfectly balanced, and if a lot of people would gain from popular news, a tiny amount of people would lose a lot of wealth.
Every profitable trader considers this as utopistic as it seems, firstly because whoever has a lot of wealth, knows his craft very well.
Please remember: the way news is being delivered is constantly evolving.
7. You keep track of your trades and learn from them
A lot of mistakes are being made repeatedly by traders who do not track their experiences.
Episodes of whatever nature, positive or negative, should always teach something, to be prepared in the future.
All of us agree that the best teacher of them all is life itself. Experience is the sum of all the things learned through the path, and for this, every trader who wants to be proud of his experience needs to HAVE LEARNED from it.
It is not sufficient to say how long one has been doing this.
Practice does not make perfect; having the capacity to learn constantly makes perfect.
There are a lot of traders that started trading 20 years ago and they’re still sitting in the same gross chair.
A good trading mindset includes a powerful desire to learn by keeping track of the trades, analyzing the causes of their results and the approach that has been taken.
The efficiency of a trader is just the consequence of a great ability to remember what he needs to when he needs to.
8. You always maintain a dose of skepticism
People often tend to mistake skepticism with pessimism or cynicism. They are completely different qualities, with very different consequences. A pessimist or cynic trader has a very clouded mind as well as a trader who lets enthusiasm and hype influence him.
Mediation is always the best choice, and skepticism is the correct mid-point between rejecting everything and being completely ingenuous.
If a bunch of passionate people and some sweet talks are enough to convince a trader, he almost surely does not enjoy a healthy dose of doubt. At the same time, if one is never convinced by anything no matter how solid it is, he’s not going to produce a single penny.
Being a skeptic is a fundamental quality that generates a strong need to prove and verify whatever is been received from the outside.
The good trader gives trust only when trust is deserved. He uses his mindset to find all the information and the proofs that will secure his important decisions before taking them. He always maintains a healthy dose of skepticism in the drawer, because it can turn to be useful.
9. You take care of your mental and physical health
The efficiency of a trader is inversely proportional to the quantity of junk food and energy drinks he ingests in a day.
Taking care of the body and mind is one of the most important things to remain focused and disciplined. Health is crucial to make good decisions and seeing things from the correct perspective. Being intoxicated with sugar all day long and conducting an unregulated lifestyle is only going to sacrifice clarity inside the brain.
Eating healthy food, working out, sleeping well, having contact with nature, maintaining one’s life balanced, relaxing when needed; All of these activities are going to make the brain of the trader an unbiased and super-efficient machine. It is well known that the most prolific traders are those who are surrounded by positivity and that maintain a healthy lifestyle.
An efficient mindset can only exist because of an efficient body and mind. There is no way to develop such an important virtue when there’s no virtue in the lifestyle.
The good trader is aware of this importance, and he sees the reflection of his way of living into the results of his trades.
10. You are constant with your efficiency
Here comes the most important one. Without this, nothing is going to work eventually. Consistency is the key. All that is going to be truly impactful and lasting is the result of consistency. In the case of wealth, it is nothing but the result of consistent profit.
To be a profitable trader is needed a constant application of all the rules, strategies, and principles that are meant to positively sustain own career. The efficient mindset is only efficient when its employment is perpetuated in time.
A bad trader takes his productivity and all that gravitates around it, sticks with them a day or two, then he abandons them for lack of discipline and true, intense desire. He thinks that to be a trader means to know what is a stop-limit and a short selling.
Every single point described in this list has to be followed every day, hour, and minute of the trader’s life. His profits and his life depend on how much he will be able to stay consistent.
In conclusion
These 10 signs can help both those who are provided with a great mindset and those who are not. They show the peculiar characteristics needed to be profitable and efficient.
Every trader that wants to be successful must know that these are ESSENTIAL.
He needs to acknowledge that trading is much more than the fancy terminology behind every operation.
It is much more than guessing where the price is going to go.
The first step is being aware that a good trading mindset is the locomotive of all accomplishments.
The second step is to completely absorb all the concepts around it, and stay true to them every single time.
Everything described in this article has the sole purpose of being informative and providing general information. The author has no intention of providing any financial advice, legal advice, or tax advice. Do not rely on this article to make investment decisions. Seek professional help before making any such decision. The author does not take any responsibility for loss or damage of any nature. The use you make of the information contained in this article is your sole responsibility.