Developing a "Trading-To-Win" Mindset...

Subject: Developing a "Trading-To-Win" Mindset... Tue Mar 11, 2008 4:41 pm

DEVELOPING A "TRADING-TO-WIN" MINDSET

You could probably fool yourself. You know, tell yourself
that you are different; that "you'll never know unless
you try"; or maybe that you'll get lucky; you know, those
kinds of rationalizations.

But, for the most part, it is common knowledge that most
"traders" are really just gamblers. Anecdotal statistics
proudly claim that only about 20% of traders in equities
or other financial instruments can say they are successful
on a regular basis.

Subconsciously, we take that in and it sits there waiting
to tell us (along with friends, family and spouses) "I told
you so". But in reality, it doesn't have to be that way.

As in most things difficult to achieve, success is not
luck or good timing but education, preparation and hard
work.

To develop a winning mindset, you need to win on a
consistent basis. To know that winning is much more
probable than losing needs to become internalized and
become an expectation. To really internalize this winning
attitude, you need to believe it.

How do you learn to believe it? Is it a matter of faith?

No. It's a matter of experience and finding out what has
worked for others, setting up a plan to identify what
needs to be learned and then actually doing it. Religion
is faith, trading success is the knowledge that it can be
done, and learning how to make it happen.

A winning attitude is built upon pragmatism, not faith.

I say pragmatism because becoming a successful trader
is a matter of taking a pragmatic course of action to
achieve a goal. So let's assume you want to be a
successful trader (and not just talk about it).

You first begin by finding out what it really requires.

As in any other type of business, to become a successful
trader, it's no secret: it takes knowledge, capital, and
the ability to implement a plan with regularity and
consistency.

Unlike most businesses, an aspiring trader can actually
"kick the tires" before risking real money. After
obtaining the necessary education and developing a
trading plan, "paper trades" can be made to test out the
trader's system and ability to produce consistent results.

Once a trader sees that their knowledge and trading
system can produce real results as defined by the real
market, it becomes a rather simple matter to adopt a
winning attitude because you've been a winner. You have
done it numerous times in the course of your paper
trading.

You know success is more than just possible.

But there is an important step that needs to be taken
before actually trading with real capital.

A large part of success as a trader is the ability to
take the inevitable losses that will occur. Losses just
come with the territory and a trader needs to learn
how to handle the subconscious stigma and fear attached
to losing. Traders need to understand their own feelings
about money and their motivations for trading.

They need to learn how to gauge when their emotions and

intuitions are getting in the way of their trading and
this takes practice in introspection and self analysis.

Traders need to adopt a psychological strategy as well
as a trading strategy.

One of the great side benefits of becoming a successful
trader is the ability for positive and honest
introspection and self improvement. Not only are these
important for trading success but also for success as
a person.

Developing and maintaining a positive winning attitude
is a matter of preparation and experience; understanding
that trading success is a sophisticated dance and not a
flailing brawl.

Once you build the confidence through experience, you
won't be afraid, rather you will learn to believe in
yourself and your system.