What is a successful trading mindset

This article is going to touch on a subject most traders never even consider working on improving. Ironically this is the very same thing that always with out a doubt stops them from creating consistent profits from the market. I am talking about trading psychology and the mistakes traders commonly make.

Common emotions
Professional traders know trading is very much a matter of having control over one’s mind and emotions. Some of the more common psychological mistakes are;

- Fear: of losing, being wrong, missing out etc

- Greed

- Boredom

- Revenge trading

Fear
Traders experience fear in a lot of their trading experience. Fear can be brought in by simply placing a trade or when a trade goes into negative territory. This fear can be crippling for a trader and can lead to that trader being frozen.

Normally fear is a result of the trader either risking too much money or not having a sound trading plan. Traders that risk too much will tend to always worry with fear as they know it is only a matter of time before their account is crippled.

Fear can be hard to banish. Traders can get rid of this awful feeling by learning a solid trading method as well as very sound money management techniques. Traders are less likely to be in fear mode if they are risking only a few % of their accounts and they know they will be able to trade another day.

Trading with only money that a trader can afford to lose is also likely to limit the affect fear has on a trader’s mental state. Never ever trade with money that is supposed to be for something else such as rent or food! Anything can happen in the Forex markets and trading with money that one cannot afford to lose is a sure way to being frozen with fear.

Greed
Greed is trait that brings many traders undone. The feeling of making a lot of money in a short amount of time appeals to a lot of people. This then increases the trader’s appetite to risk too much, on too many trades and bingo their account is crippled!

Another all too common situation is the trader in the winning position and is up a tidy sum of money. Instead of taking the money when the market makes it available the trader hangs on looking for more and more! You can guess what happens……… Yep the market turns and the trader is left with a loss.

I have a motto and that is “Always leave some for the next guy”. I never look to pick the bottom or the top instead looking for a logical place price will turn. I place my take profit a few pips above or below this level as to make the chances of my target getting hit a lot higher. When the market makes profit available to you, take it and move on to the next trade. There will always be another trade!


Boredom

Forex trading is not a form of entertainment. It is a business! When new traders are bored they will quite often turn to the markets for excitement. This in turn tends to lead to over trading. They want to feel the rush of being in a trade so they place just any old trade.

Do not fall into this trap. Have set times that you scan the markets for setups. As soon as your done, turn the computer off and do something else. Do not look to the market to fill the feeling of boredom.

Revenge Trading
Quite often when amateur traders lose a trade and money, they will look to make that money back straight away. This is regardless of whether there is a viable trade to be placed or not. This then leads to the trader losing more money and on the cycle goes.

Trading is a random event. No matter how good the setups look you just don’t know which trades will be the winners or losers. If you have a proven edge on the market you know that over a large sample size of taking only the viable setups you will be up. Do not take average trades as they decrease your edge on the market.

When you place a losing trade move on and look to the next trade. You should definitely learn from the trade but start to look at the market as a random event.

Two traders can have the exact same method with all the same equipment. One trader makes money consistently and the other losers. Why is this? It’s because the trader that makes money has mastered their beliefs and frame of mind. They have learnt to deal with the problems detailed in this article.

Trading is all about dealing with your emotions and subconscious beliefs. If you can start to work on your state of mind whilst trading you will increase your edge in the market.

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