Trader psychology is talked about almost as frequently as trading tactics, after all, any tactic is bound to fail, no matter how well planned, if the trader maintains a self-sabotaging mindset. One thing that many proven traders attribute as the source of their success is their ability to control the narrative that goes on in their mind. This isn’t only true for trading, but in other disciplines of life as well. Motivational psychologists have often explained that if a person lets negative thoughts and fears control their mindset, then they’re going to go nowhere, quickly. The ability to consciously control the focus of the mind is a long and hard path, but the payoff makes it consistently rewarding.
In this article, we hope to provide you with a strategy for achieving the best possible mindset. However, before we do, you need to understand how and why affirmations work. According to Emile Coué, who first founded the approach, “When you verbalize something and repeat it to yourself, it has the real effect of influencing your thinking”. That is why affirmations are so successful. Whatever the object of your desire is, you automatically think of it in a positive light, so therefore when you finally come to approach it, you are upbeat, full of energy and motivation, effectively attracting the subject of your aspiration.
There are three rules to keep in mind when it comes to using affirmations.
Affirm the positive. Don’t think “I’m so nervous” this will focus on the opposite of what you want. Think in terms of what you want to happen.
Make your affirmations simple. It needs to stick. Choose just a short phrase that you can repeat over and over again.
Don’t make yourself believe it, just say it. Don’t think about forcing yourself to believe what you are saying, just keep repeating the affirmation. This alone is sufficient for it to work in changing a mindset.
Now let’s address the 10 trading affirmations to not just start your trading day, but to help you develop a trading mindset that is consistently profitable.
1. “My mindset is crucial to make money”
You can plan all you want, but if experience hasn’t told you by now, than it will at some point in the future, that trader psychology is paramount. I can’t overemphasize how important a trading mindset is in relation to the success of your performance. Mark Douglas, a famous trading educator once said that “Even if you have a proven, high probability method, it’s the exactness in the execution of the method, where the necessary mental skills become crucial. If you don’t have those mental skills, than any winning strategy is bound to lose.”
2. “I’m a winner”
I know you’re cringing because it sounds so atrociously cliché, especially as an affirmation, but that point of positive thinking is crucial. It’s the idea of ‘faking it, ‘till you make it’ and you are not going to be a successful trader until in your heart you truly do believe that you will be a successful trader. Once your mind believes it can achieve something, than your behavior will be directed to the actions that are a part of those beliefs, those actions will become routine and those routines will eventually culminate in a series of profitable trading moves.
3. “If I win, I’m taking the profits”
Sounds like a no brainer doesn’t it? But all too often traders keep holding onto their positions until they eventually turn against them. As the saying goes ‘a bird in the hand, is better than two in the bush’. Meaning, if your account is in a winning position the time to cash out is now! By all means give some thought to your exit strategy, you may want to start off being more risk conscience at first and then gradually ease out to enhance your profits. But do this only once your knowledge of the markets is a lot more grounded.
4. “I’m not going to be influenced by media hype”
According to Nial Fuller, on his blog “learn to trade the market’ market news and fundamentals is an enormous waste of your time resulting in ‘analysis-paralysis’, where you’ve studied the market to exhaustion with the effect of over complicating matters with the net result of potentially losing money. Trading legend, Ed Seykota is in total agreement
“I am primarily a trend trader with touches of hunches based on about twenty years of experience. In order of importance to me are: (1) the long-term trend, (2) the current chart pattern, and (3) picking a good spot to buy or sell. Those are the three primary components of my trading. Way down in a very distant fourth place are my fundamental ideas and, quite likely, on balance, they have cost me money.”
5. “There is no certainty, just probability”
Too many traders all too easily get swept up in the conviction that every trade is going to win, forgetting the impossibility of a 100% winning strike. It’s crucial that you remind yourself that you are going to experience trades that lose. This mindset will keep you on the golden mean of not becoming too confident and risking too much money and at the same of becoming pessimistic and dissuaded from trading anything at all. This entails how you are going to approach risk. As your outcomes are going to be randomly distributed, your approach to risk is much more likely to be realistic and calm, dialing your risk down to a level that you can afford every time.
6. “I put in a stop-loss for every trade”
Rule 1.01 of trading: Put in a stop loss for every trade, every single one. It only takes one large move against your order to absolutely devastate your position. So to save yourself much unnecessary heartbreak, always put in a stop loss, ok?
7. “I won’t interfere in the market”
The nature of the market is to go up and down, it’s your job to identify those high potential entry and optimal exit points. Yet it’s what happens in the time in between those two points that will separate the gold traders from the shaft. The habit of successful traders is not to meddle in their trades, they let the market do its job and do their best to avoid intervening unnecessarily. Don’t sit there watching the charts after you’ve executed a trade, no matter how much you will it, you can’t control the market to turn in your favor. So accept that the market is an untamed beast and let it do its thing“Trading is much simpler than it looks”
Trading looks complicated with all its charts and analysis tools, but it doesn’t have to be complex. To be a successful trader, you just need to learn a simple yet effective trading method that works for you. For example, for technical analysis all you need to have is a solid understanding of trends, levels and signals, otherwise known as T.L.S.
9. “I am a professional trader, not a gambler”
Gamblers play games of chance with no required skill and without any need for high-probability decisions. They do not have a plan or a strategy (in most cases). If you are trading just for an adrenalin kick, that’s fine, but then don’t be disappointed when your positions turn into losses. For long term success in trading the markets you need to develop an effective trading approach that you can skillfully apply time after time.
10. “Success is not dependent on intelligence”
William Eckhardt of ‘The Turtle Traders’ wrote “I haven’t seen much correlation between good trading and intelligence. Some outstanding traders are quite intelligent, but a few aren’t. Many outstandingly intelligent people are horrible traders. Average intelligence is enough. Beyond that, emotional makeup is more important.”
When it comes to trading it’s not so much your genius that you need to worry about, as much as your psychological stamina. If you’re are a determined positive thinker you will have the stamina that’s necessary to succeed. If you are firmly committed to the dream of your own trading success, than this is the element that will be tested and through which you have to preserver in your journey towards making profits.
from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/FYC_x2pZhuQ/
from Online Forex Trading Resource
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