This posting is about the mental attitude and knowledge that you need to become a winning trader.  Successful traders have come from all walks of life.  Currently small traders can have access to virtually the same data as professional traders.  There are a number of excellent books that outline the methodologies that have been successful with others.  This posting summarises the mental attitudes of those who have become winning traders.

So why then has the percentage of winning traders not increased over time based on government studies of stock and futures traders?  The answer is that trading success is primarily due to mental attitude and outlook.  In ordinary life, people can survive without fine tuning their thinking and can maintain illusions.  Trading will brutally and expensively expose any personal shortcomings.

Here are some mental characteristics of the winning traders that you will need to adopt in order to succeed:

• You are ultimately responsible for yourself.  No-one else can take responsibility for your success.  Don’t rely on a broker, don’t ask for tips or blindly follow recommendations.
• The market sets its own direction.  Ultimately the market can’t be controlled or coerced.  If you fight it, it will wipe you out.  You can predict it.  So focus on what you can control, your entry and exit points, how much risk you will take on.
• Manage risk.  Winning traders carefully manage risk.  They will set stop loss points at the time of entering a trade.  They will immediately exit a losing trade rather than waiting for it to turn around.
• Have a winning methodology and stick to it.  Successful traders have carefully backtested an approach across a range of market conditions.  Once they are confident, they stick with the system, even if there are a few losing trades.  A winning methodology will have positive expectancy - on average, each trade will make a profit after costs.
• Know thyself.  Winning traders understand their risk tolerance and mental strengths and weaknesses.  They adopt a trading style that reflects their own nature.  A winning trader is at peace with himself or herself with no serious unresolved personality issues or conflicts.
• Don’t do it for the money.  The best traders see trading as a challenge.  They transcend greed or fear by letting go of money.  The money they earn becomes only an input into their success equation, it is not acquired for its own sake

The best traders have done a lot of work on themselves by looking inside and making changes.  If you want to become a top trader, you will need to do the same.

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This entry was posted on Monday, March 17th, 2008 at 12:19 pm and is filed under Winning Mindset. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.