What does it take to be a successful retail trader?
Check out the 5 steps for private investors to develop a winning trader’s mindset.
Learn how to cultivate the type of trading psychology that will best help you achieve your investment goals.
A Winning Trader's Mindset
Among the most important psychological traits of successful investors are the ability to accept uncertainty and the foresight to stick to a trading plan.
Successful traders understand that sound Trade Management is as key as opportunistic Market Timing and fussy Stock Selection.
So, while experience can often separate winning traders from those who are less successful, that comes with time. But if you have a winning trader’s mindset, you’ll do well no matter your level of experience or account size.
Remember, your psychology is not a fixed feature: you can learn how to cultivate the type of trading mindset that will best help you achieve your investment goals.
How Do Winning Traders Think?
The secret to winning in the markets is not about excellent trading systems and widgets. It’s about developing a winning psychology. This is formed by certain beliefs, attitudes, and behavioral traits.
First of all, a successful investor’s psychology rests on an unwavering belief that they CAN BE a winning trader. That, if equipped with a proven methodology, smart tools, and self-discipline they can build their advantage.
This results in a strong self-confidence that is not shaken by a few, or even several, losing trades because they know they can easily initiate trades whenever a profitable opportunity presents itself.
The Role of Beliefs and Attitudes in Trading Psychology
Beliefs
If an investor believes that the markets are always offering them plenty of profitable opportunities, they’ll become more confident and comfortable about trading. They will recognize optimal market conditions to trade, either bullish or bearish and wait for a trade setup to prove itself.
Conversely, if an investor thinks that the markets are rigged against them, they will never be able to objectively evaluate the state of the market or a trade setup.
In reality, the market is completely neutral – it doesn’t care whether a trader makes money or loses money.
Attitude
A winning mental attitude drives winning behaviors and is accompanied by a sense of responsibility. The responsibility to build good trading habits and be consistent.
Stop expecting the markets to do anything for you. And stop ‘fighting’ them too. Instead, work on managing your emotions and executing your Trade Plan with precision.
It’s about consistency in sticking to an effective trading methodology, for example, following the Big Money Footprints. This involves focusing only on high-probability trade setups and implementing sound trade management rules.
Regularly tracking trades in a trade journal is also a great way to develop good trading habits.
5 Steps to a Winning Trader's Mindset
- Be comfortable with uncertainty
Risk is an unavoidable part of trading, and investors must emotionally accept the uncertainty that comes with it. Being in control of your trades by following a proven methodology and a clear trade plan can help you minimise risk and have peace of mind. - Adapt to changing market conditions
The market is unpredictable, and no strategy can accurately predict future price movements. Winning traders are able to adapt to changing market conditions and second Market Timing. Don’t fall in love with a particular stock or market analysis. If the charts indicate that future price movements are likely to change, you must be able to adjust your trading strategy without hesitation. - View the market objectively
Investors should not let subjective opinions cloud their trading decisions.
Stay calm at all times and adopt an objective view even when market action seems to be moving against your position.Always ‘Trade What You See’ regardless of what market experts are saying on the news. When doing your Stock Selection look for:
- A volume pocket in the last 30 days
- A recent price jump (up or down)
- A key level is crossed and held
- Options activity from leveraged players
- Do not become emotionally invested in your trades
Traders should be aware of the various emotions they go through when trading. There is no point in denying these feelings. You can learn to overcome the psychological pitfalls of stock market trading, just as I did on my ’emotional rollercoaster’ journey to becoming a wiser trader.This is an important part of cultivating a winning trading mindset. Don’t get too excited about winning trades or too upset about losing trades. The key is to keep your emotions under control and to stop trading when you become overly emotional.
- Take the necessary steps to be self-disciplined
Self-discipline is critical to a winning trader’s mindset. But it can also be the hardest part of trading psychology to master. Many traders seem to think that because they’ve made their own trading rules, they are free to break them. While this is true, it is not an attitude that will contribute to cultivating a winning trader’s mindset.When trading, follow strict money and risk management rules. And always calculate your potential risk before entering any trade.
Our Head Mentor Glenn has helped hundreds of struggling investors become disciplined, successful traders. He says: “I help get my mentees three things right, as they can help transform an investor’s trading:
- Have a Daily Routine to find AAA setups
- Journal Trades (especially mistakes!)
- Consistently follow a Trade Plan”
