How to Get the Right Mindset for Trading Success
09/24/2010 12:01 am EST
After having spoken with many of the foremost "experts" on the trading brain, it’s becoming more widespread in thought that the successful trader possesses a mindset that is unique and different than that of the trader who struggles. I can speak from experience that this is without question. But some food for thought for the novice: What type of mindset is necessary for someone who wants to learn to trade, and learn to trade consistently and successfully? Which mindset would most benefit the rookie?
First of all, there must be a very strong desire to learn trading. I also believe that it’s essential that the novice be independent in their thinking process. If you look at the profession of trading and take into account that very few succeed, that should in itself give a clue as to what is needed.
The overwhelming majority of new traders are simply looking for an easy solution to trading. They want something they don’t have to work at, but that will make them a lot of money (and fast). Most will never admit that they will never put in the appropriate time or money into their education. They would simply like to read a book or two and then call themselves traders. Some will spend some money on a program, a “system,” or methodology, but the expectations are not realistic and will soon either blame the program or the creator of the method and simply say it doesn’t work.
Now let’s get into what type of mindset is going to allow the beginner to learn the necessary ingredients of trading that will ultimately account for their success or failure. The mindset of the student must be open, for starters. This means that the student must be willing to assume full responsibility for his or her own process, and the student must always look deeper for the answers. They must be willing to go through periods of frustration and exasperation. That is part of any learning process. Their ability to observe the markets and the movement of price so that it translates into opportunity is crucial. Observation is the key word here. Perseverance will go a long way in learning to trade well. In fact, you’ll often hear me tell new traders or subscribers of T3Live that nothing can replace time as a teacher.
Think back through history for a moment, and try and think of the some great minds that advanced through history in some way. They did not do it by someone simply handing them answers and then everything fell into place. Quite the contrary; many times, they were at a stalemate with their work, but their desire and perseverance to succeed carried them through. I am sure that an open mind played a large role in the next steps forward. When your mind is open, it allows the best of your creative and intuitive process to work. From a personal standpoint, like most experienced traders, whenever I get into trading lulls is usually a direct result of not keeping an open mind.
There is a massive amount of satisfaction in discovering answers on your own. When you willingly let that be a part of your learning experience, you will be far ahead of the crowd who is looking for the “ABC” system. If you are fortunate enough to have a mentor, let them guide you, but start out on the right foot. Go in with the attitude that the answers you are looking for are there, however, it is your responsibility to unfold them through your observations and hard work. You can then start to put those answers together to get closer to your goals. You cannot realistically expect to trade at the same level of skill as someone who has been trading for a longer time. There are a lot of pieces of experience that went into forming, molding, and developing that skill level. That person was willing to travel a road unknown and take each piece and eventually put it in its proper place. I guarantee you they did not read a book or two and then become successful. I certainly know the road I went down (and continue to travel down), and I can tell you from personal experience that providing yourself time is pivotal. My journey took almost five years before I even knew anything about my trading identity.
It’s also not realistic to expect someone who is not willing to do the work to be successful. To learn a system and instill the proper mindset, it must be an attitude of winning and succeeding from the beginning and of accepting that there will be many unknown bumps and bruises along the way. These bumps and bruises are very necessary to the process; wear them with great pride.
Eventually you must step outside the ring of security and put your skill and knowledge to work. This includes resisting the urge to get validation for your actions. To be totally responsible you must be willing to do this. Maybe the novice will have to try a few ideas on their own initiative without validation and be willing to fall and get back up. If you are afraid to fall, and really want someone to hold you up in trading, trading is probably not for you.
The correct mindset from the very beginning can make or break you as a trader.
By Evan Lazarus, trader, T3Live.com