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Mentality

Tired of Losing?"The Market cannot hurt Me. I can only hurt my Self!" - Josh Ridenour There is a Time for Losing - The 29th verse of the Tao Te Ching is about how there is a time for everything in life. A time for being ahead, a time for being behind. In the market, there is also a time for everything. A time for large profits, small profits, break even trades, losers, and consecutive losers which lead to a draw down. It is easy to get caught up in the heat of the moment depending on where you currently are. But it does not really matter what part of the cycle you are in, it is all part of a traders life and the cycle of a trading performance. Stop Predicting! It is a false belief to believe prices and markets can be predicted. If it were possible eventually the majority of market participants would figure it out and there would be no one left on the other side of the trade, and the market would cease to exist entirely. If it were possible to predict markets, you could avoid losing trades and only take winners. Anyone who has been trading for very long knows this is simply not the case. The problem with making predictions is you then shut your mind off from the information the market gives you. Instead of being open to what is happening, your mind becomes rigid and can only take in what confirms your beliefs. This prevents you from being able to flow with the market, and open your self to the opportunity in front of you. The best traders admit when they are wrong, get out, and even reverse if necessary. If you dont believe this - listen to a stock analyst on Mad Money or any other TV show about stocks. They are often so confident in what they say that they might even convince you! But there is a reason why he is on TV talking about markets, and not trading them. If he could trade the markets and make money he would have no reason to go on TV as the financial rewards are miles apart. In fact, analysts make the worst traders because they are so caught up in their thoughts and beliefs about market direction that they cannot trade effectively! Cease efforts "Wu Wei" In Eastern Philosophy there is a term "Wu Wei." It cannot be fully understood or explained in words, only experienced. At the essence of its meaning is to "Let be" to "allow" or "flow like water down a stream." The point is to stop resisting, and stop trying so hard. The harder you grasp at something, the harder you try to succeed, the more you fail. If you are constantly trying to make money, and constantly trading, you are probably not making a consistent return. Rather than trying so hard, let trading come naturally. Profitable trading is effortless. It does not require thought, only action. In fact, I try to do as little as possible, and trade as little as possible. My most profitable weeks I hardly trade at all! This has become a fundamental aspect of my trading system. Instead of constantly trying to make money all the time, I simply wait for a pot of gold to be in front of me before I do anything. Then, I take it. Again if you dont believe me; try as hard as you can tomorrow to make as much money as possible and see what happens! Stop Trying to Remove or Control Emotions - Most traders who have been trading for a while come to the idea that emotions prevent them from success and are standing in their way. I know, as I have been there. And so we try as hard as we can to remove emotions from our trading. There is a problem with this concept. You are a human right? As long as you are human, you will have emotions; no matter how hard you try to remove them. It is simply not possible. So removing emotions or attempting to do so is the wrong approach. Instead; use your emotions to your advantage! They are warning signs; listen to them. Then there is the negative internal dialogue which the market often brings out. After a series of losing trades, many traders get upset and feel bad. They blame the market for taking from them, and feel like a loser. How do you think a trader will perform after feeling this way for a few days or longer? His performance suffers as he tries to take back what was once his and he compounds his mistakes by trading out of a negative mindset. You have to learn to recognize and become aware of your internal dialogue. It is very important to your trading career, and your every day life. Most of us live our lives without the slightest idea as to what we are doing to our selves. Your mental structure is a choice. This is what I mean when I say "The Market cannot hurt me, I can only hurt my Self." My Trading Psychology book "A Traders Mentality - The Path of Self Discovery and Being a Trader" is all about these ideas and how to free your mind and better your trading performance. If you found this helpful, please like! Feel free to comment or ask questions.
Education
by tradersmentality
MOST IMPORTANT TRADE LESSONS!Lesson 9 Trading Psychology is Important When you look at the market you should see your self. The market is a collection of buyers and sellers. You are a participant in that marketplace, and therefore you are the market. How can you understand the market without understanding yourself? The mental landscape of a trader is extremely important and very valuable to a profitable trader. Those that do not understand this, are likely not making money in the market. Most people wanting to be traders never stop to consider this, and they think it is more knowledge about markets they need to make money. Most of the time it is what is going on in their mind that needs work. If you think you are going to wake up one day and be a profitable trader without working on your self, you are mistaken. If you think you are going to read a few books or watch 100 videos on trading and walk into the market the following week and make money, the traders who know the value of internal work will thank you for your money! Of course you must first understand markets, price action, the traders equation, and how to read a chart. But after that you must move on and dive into your trading psychology . It is not understanding markets that brings money into your account. It is your understanding of your perceptions of the market, awareness of your internal dialogue, thoughts, and emotions, along with your knowledge of the market. Ultimately it is your actions that are generated from these that dictate whether or not you will make money. If you do not understand what is happening within your mind at any given time, you are unlikely to achieve consistency long term. Sure you may pick a few good trades. Anyone can find themselves in a winning trade, even those who know nothing about markets. But will they continue to perform well over a month or a year? It is very unlikely. Trading psychology is vital to trading, whether you choose to accept it or not. The market is a paradox, a contradiction. If your mind is tied up and you are unaware, you will make poor actions in the market. Your mind must be free. Free to flow with the market, regardless of what you want or expected. You must be able to bring your mind back to the market and the necessary action right now. If not, you will be stuck within thoughts of what happened 5 minutes ago, or held by anger and frustration for what the market should be doing. If you do not devote time to understanding your mental landscape you will never grow, and never escape the mental turmoil which the market can cause, no matter how much time you devote to understanding what markets do.. For more information on how to develop this awareness or understand your self on a deeper level, see trading psychology. Lesson 10 Allow for windfall profits Many traders believe they must hold for a reward of twice their risk or believe they have high probability and so exit at one times the risk before the market takes it back. These concepts and ideas are more likely to hurt your performance than benefit it. The truth is, the market offers what it offers, and that's it. Sure sometimes its exactly 1x the risk or twice the risk. Other times it is much more. Cutting a winning trade just because it is reasonable, does not make it the best choice. In fact, when you are in a position with exceptional follow through, you must allow it to flourish. In other words, you must allow it to grow into a windfall profit. It only takes 1 out of 10 of these types of trades to create a positive net result. If you cut this 1 trade short because the market has gone to twice your risk, you are only hurting yourself and your numbers. This is like cutting a flower when it is just starting to bud. You do not allow the flower to bloom , and prevent the beauty which will soon appear. Instead you must nourish the plant, give it water, and allow it to grow into what it can be. Cutting a winning trade short is a self inflicted wound. This is often due to fear such as fear of a reversal, or fear of giving back profits. Thoughts of getting back what you previously lost, or hanging on to what you have right now is what leads to these poor actions. Being unwilling to allow for a pullback against the position which is necessary to allow it to grow. So how do you know when to hold and when to exit? That takes experience. What is important is your willingness to learn, and openness to allow a great trade to flourish. However there are signs which can help you identify which trades are likely to turn into a windfall profit, and those that you should take what the market offers you. For clarity and more information on this see Investing Guide. *If you find this analysis helpful please like! Feel free to comment or ask questions.
COINBASE:BTCUSDEducation
by tradersmentality
Lessons from an Experienced Trader #3Lesson 7 Trade Outcome is Random The outcome of any given trade is random, no matter how strong your edge is. It is impossible to predict whether a trade will result in a loss, decent profit, or a windfall profit. Contrary to what most Price Action traders and price analysts believe, you cannot and will never be able to predict the market. Most amateur traders fail to recognize this fact, or deny this reality altogether. They believe eventually, they will be able to avoid losing trades and pick winners. They do not understand the outcome of any given trade is random, and therefore impossible to know before hand. Consider weather prediction as an example. Meteorologists have highly sophisticated weather models and algorithms to predict weather behavior, just like traders and institutions in the market. Yet the weathermen cannot accurately predict what will occur. They can say "There is a 60% chance of rain today if you live in X." But they cannot say exactly when or where rain will fall. It is the same in the market. You may have a good idea of what may occur, and even be right! However, there is still a reasonable chance (usually around 40%) that you are wrong, and the exact opposite will occur. The market is always right. It does not matter what you think or believe should or will happen. All that matters is what is happening. Just because a trade looks good or an edge is strong, does not mean it will result in a profit. There is still an opposing probability that it will fail. The point is that you will never know beyond a reasonable doubt what the market will do next. You may have a hunch, or a strong edge, but that will only get you so far. Therefore the only thing to do is to always take your edge, because you never know if this will be the windfall profit you are looking for, a small profit, or a loss. And quite frankly, it does not matter! Lesson 8 Market Outcome Does Not Matter The outcome of any single trade does not matter. It is very common for traders to become attached to the outcome of this individual trade. This is what leads to emotions, anger and frustration with trading and the market. We get stuck in the mindset that we have to win X amount of profit like 2X risk on this trade, or have to make money every day to be a profitable trader. This is not the case at all. In fact you only have to win one 1 or 2 really good trades out of 10 to maintain a consistent performance. Any single trade is irrelevant to a trading system or strategy. It is the cumulative result over a series of trades that results in a profit. This is why it is so important to know and only trade your edge, otherwise you introduce randomness into your performance, and are unable to produce consistency. *If you find this analysis helpful please like! Feel free to comment or ask questions.
AEducation
by tradersmentality
2
Lessons from an Experienced Trader #2Lesson 4 Know what you want in the market Contrary to what most believe, successful traders do not actually trade constantly. Attempting to trade constantly leads to increased commission costs, random trading, and compound mistakes. In fact, successful traders spend most of their time doing absolutely nothing! How long does it take to enter an order? A click of the button. A few seconds. Maybe a few minutes at most to create bracket orders. So what do Professional Traders do the rest of the time? They wait. They wait until the market offers what they want or are looking for. Then after entering they wait some more to see if they are right. They wait for the market to provide them with the information to either hold, or exit. They allow themselves to Be, the trade to Be, the market to Be and do what it is going to do. They do not force actions or attempt to make the market do what they want. They wait until the action comes about on its own, until it is natural, a reflex. If you do not know what it is in the market that you are looking for, you will fold under pressure and confusion. A Professional Trader knows exactly what he wants (not just to make money), he knows what he is looking for in the market, and is willingness to wait for it to arrive. By doing so, he is rewarded and paid by the market for his patience and willing to do nothing. Even if this means not trading for hours, days, or even weeks depending on the time frame. It is far better to do nothing and avoid unnecessary losses, than to try and create tensions, forced actions, and lose money. You have to ask yourself "What is more important? The actual act of trading, or making money?" Lesson 5 Define your edge An edge is what you have defined as being what you want from the market in the previous lesson. This can be anything from a specific setup, to just plain context like a strong market. If you do not know what your edge is, you will struggle to perform consistently due to randomness. Many new traders, especially those who follow price action, believe they should be able to trade the market no matter what the context is. If you think you are just going to walk in to the market, trade based on whatever the market is doing and make money; you are fooling yourself. Doing so will lead you to trade randomly, entering willy nilly at the market, and make many mistakes which will cost you your profitability. Do you walk into Walmart or Aldi's without knowing what you want to buy until you get there? No, you have a list of items, or at least an idea of what you need before you go. Do you start a business because you woke up this morning and thought it would be nice to own a car wash? Hopefully not. You first identify an opportunity, and then create a business model after a lot of research. Then finally you open the business. Of course everyone thinks or says "well so and so does this and that, and he seems to be making money." Sure, maybe he is, maybe not. If he is, he has defined his edge and is simply employing it. What someone else does has absolutely nothing to do with what you should be doing. Once you have defined your edge, you must wait for it to arrive. If the market is not offering what you want or what your edge calls for, you do nothing until it is. If your edge is a trend trading method and the market is in a trading range, you do not trade until the market is trending. If you have not clearly defined your edge, you should not trade. If you do not know what it is in the market you want and are looking for, you have no business in the market. Simple as that. If you chose to do so, you are putting yourself at unnecessary risk and trading randomly. Yes this sounds harsh, but it is the reality of the market. The market will not give you anything, especially if you don't even know what it is that you want!
COINBASE:BTCUSDEducation
by tradersmentality
This is what you need to know before tradingHi this is my approach to the market. Prepare this list for yourself before trading: - Good broker - Good mental books to help you (my recommendation Zen in the markets is a must) - Good trading idea - Good risk management - Good rules - And always learn new ideas and back test it - And learn to manage your life (you need no distractions so do the things you need to do before hand, it can be job or homework) As far as we know the market is quite unpredictable it is essential for you to prepare yourself or you will learn it the hard way. My advice : after you checked the list learn lot of trading ideas and choose the most profitable ones to back test it. - Follow your rule - Whatever you do, do not go against the trend always follow the trend FOLLOW THE MARKET - Always approach the market blank minded and do what the market is telling you. Good luck If you want to create new broker account i recommend this broker : lnd.easymarkets.com
Education
by BilegtGanbaatar
Trading Psychology 5 Edge ExecutionEdge Execution Trading is a numbers game, and markets are based on the mathematics of the traders equation. However, understanding this alone will not guarantee profits. The ability to apply and conform to the math of the current market context is what leads to consistent profits. Beginners often have a misconecption that they need to know what is going to happen over the period of the next X number of bars in order to make a profit. They believe they must enter at the exact right time and price in order to win on a trade. This could not be further from the truth, and anyone consistenly making money from the markets knows the reality. The reality is a trader does not need to know what is going to happen next in order to make a profit. In fact, a professional trader knows that any given trade is irrelevant to the bigger picture, and an income is generated over a series of trades; not any single trade. This menatlity is past the duality of winning and losing, which are simply accepted as part of the job. This can be called the "probability mindset." Profits are generated over a series of trades, not any single trade. Therefore, it is not necessary to make money on every trade, every day, or even every month to be a succesful trader. It takes time to build confidence, believe this is true and fully understand this concept. Perhaps this is why most traders fail, by giving up before coming to this realization. It has been said that professional traders have "Won the game before they started playing." (Jack Swagger). This confidence can only come from the probability mindset, when a trader accepts he may lose on this trade, the day, or even this year. But he accepts his risk, and trusts the math that over time he will generate a profit. Even if he takes a large loss, or several, it does not matter; he knows he will make it back up. The overall point of this is that losses are part of the trading process. If a trade is a loser, it does not matter; move on to the next trade. Dwelling on losses or a drawdown does not bring the money back, but continuing to trade does. In this sense it can be said that a successful trader "trades his way out of a drawdown." It is helpful to think of losses as the "cost of doing business" just like any other business would incur expenses while conducting its operations. There are very few (if any) businesses that do not require heavy start up costs, or capital to continue the business while generating profits. Ever heard the saying "It takes money to make money?" Trading is no different, although most traders fail to realize this, and focus solely on profits. In trading, our costs are commissions and losses, which are offset by gains, resulting in a net profit. Employing your Edge So what does this have to do with exeucting an edge? Well, it is necessary to understand not every trade is a guranteed success, and there is a random distribution between wins and losses, with any edge. Even the best setup or edge will result in a loss 30-40% of the time. It is virtually impossible to know in advance, which trade will win and which will lose. Therefore it is absolutely imperative to take every trade that meets a traders edge, regardless of how the trader feels, thinks, or any other variables unrelated to the edge. With this said, here are the basic steps to exeucting and employing an edge. 1). Identify edge. Pick a setup (second entry, wedge reversal, follow through bar, ect.) It is a good idea to start with one until familiar with reading prices. 2). Ask yourself at the close of every bar "Is my edge present?" If no, wait. If yes, enter the trade. 3). Execute the edge with a series of 10 or 20 trades, document every trade. At the end of the series analyze results and tweak. Wishing you the best of luck on your trading journey -Josh Ridenour
Education
by tradersmentality
1
Trading Psychology 2 How Strong is your Trading Mentality?How strong is your Trader Mentality? Signs of an "Amateur Mindset" If you identify with any of these characteristics while trading, you are suffering from an Amateur Mindset. These are normal when first learning how to trade, and even common in advanced traders who have not yet mastered their trading psychology. Very succesful traders may still occasionally experience some of these symptoms while increasing positions, but as far as day to day, do not. Hesitation to enter positions meeting edge criteria Fail to exit trades not performing to expectations Feelings of fear (missing out, failure, success, leaving money on the table, etc.) Upset/mad when prices go against you or happy / relief when prices go your way The market is too painful to watch (pain avoidance) Market actions led by emotions / feelings / stress Forms and applies rigid rules for entry / exiting market Afraid to make mistakes / upset after mistakes Signs of a "Probability mindset" or Professional Trader Enters or exits trades without hesitation Does not experience internal conflict while entering, or managing trades Willing to take a loss (accepts his risk) Flows with the market seemingly effortlessly Not attached to outcome of any trade Emotions / stress do not lead to market actions Enters / exits however necessary Accepts mistakes and moves on Interestingly, it is easy to separate a professional trader from an amateur, not based on profits or losses, or the amount of ticks he makes a day; but based on his actions in the market. By observing how a trader interacts and engages with the market it is obvious if his actions were led by emotions or intuitively based on what the market told him to do at the time. Professionals flow with the market, and do not fight or resist it in any way. As a result money seems to flow effortlessly into their accounts, and their equity curve is that of a healthy bull trend. Amateurs are constantly fighting the market and themselves, with actions led by what they think, perceive as a threat, or the false belief that they know what is going to happen next. The outcome is a slowly depreciating account balance, and an equity curve that is flat or in a bear trend. The later is a sign of trading errors made by the trader and not that of an edge being executed properly. Continued...
AMEX:SDSEducation
by tradersmentality
Mentality and Sticking to Your PlanDISCLAIMER: Hi everyone, I'm new to trading and this is just a log book for me on applying everything that I have learned and continue to learn as I go along. That being said, I do not advise you to base your trading on these "ideas". Last week I published a small "idea" for a quick scalp on the CADJPY. I noticed an uptrend that I didnt expect to go past a certain Resistance level from a few months back. I set my Take-Profits and Stop-Losses at fare prices, and hit my Take-Profit. I was happy with my trade but, being the amateur that I still am, I not only left money on the table but I didn't stick to my plan. I looked for what would have been another opening, which turned out to be a correction that hit my stop loss as soon as the market opened (thanks to a huge gap). Not only did I loose the profit from my previous trade, but the price rose up and came back to where I wanted it to be all along. I have yet to lean how to keep emotions out, and set myself into the right mentality. But I do know that it is something that we all must learn to be succesful traders.
Education
by EdwardFabianRamirez