Having The Right Mindset!

[emazing 10]

I believe if you are fairly new to trading, than you need to embrace the right mentality FIRST, not learn about every indicator, chart pattern, trading system, etc. Many trading rookies think the more they know the closer they get to finding the "Holy Grail." Yes, you do need to know the basics, but my point is that it's not about the system, it's about...

 

Having The Right Mindset!

 

Get that in your head! If you don’t have the right mindset FIRST, than chances are, you are just gonna belong to the 95% losing statistic.

 

The following is a true story that happened to me when I was nine or ten years old that I think sums it up nicely. Pay close attention now:

 

There was a convenience store near my house that had a video arcade game called Karate Master or something like that, I really don’t remember anymore. It was one of the first fighter-style arcade games where you could fight the computer, or, another player. Anyway, I poured my allowance into that machine for an entire summer. I became pretty damn good at it. I learned every move... every punch... jumping kicks... roundhouse kicks... front flips over your opponent... you name it I knew it. I thought I was "hot-shit."

 

Anyway, one day along came this older kid. He was maybe fourteen or fifteen I guess, and we decided to play a match. I started off doing all my fancy moves, and all he did was calmly block every one of them. Everything I tried he blocked, and every time he blocked one of my fancy attacks he calmly kicked me in the stomach. Now, that's the first move you learn, the front kick. There were dozens of other moves, but the front kick was the simplest one of all. And that's all this kid did. Every time! I couldn't beat him, EVER! He simply didn't care about any other move besides the simple, yet effective front kick. And he was unbeatable, with only that one move.

 

Trading is the same thing. The point isn't to learn all the fancy moves, the point is to be right and win. If you take one kind of setup, regardless of what it is (as long as it has a statistical edge), and MASTER it, you will win.

 

You don't fluctuate from your move, you don't care what happens without one of your setups being present. Whatever you define as a setup, that's all you look for, any market action besides this should be invisible to you. Learn to NOT care if the market moves without you. Don't go looking for new indicators to explain every move in the market. Keep it simple. Just play defense like my Karate Master nemesis. Wait for your spot and, when your setup happens, kick it in the stomach and then...

 

Go For The Kill!

 

The fact is, you will NEVER find an indicator or combination of indicators or a system that works EVERY time. All you can control is how often you take a setup when you see one, that's it. As long as your setup has an edge (hell, even if it doesn't), with good money-management you'll win as long as you NEVER deviate and NEVER miss a setup. Put the odds in your favor and go about adding to your sample size. The more setups you take with an edge, the more you'll win.

 

You can add "moves" down the road, once you've mastered the front kick. By then you'll have won so much it’ll all become unambiguous.

 

That's my $0.02. Hopefully my ramblings help the light-bulb go off for at least one person trying to figure this crazy game out.

 

Good luck :-D

[steve46 12]

Ive spent a good deal of time with students trying to model the "right" mindset

 

and an equal amount of time recently learning a method that helps retail traders to insulate themselves from the stress of managing a trade.....

 

There are two parts to the method....one is breath control and now that I have seen it work, I teach it to every student...and the second is what I call "talk therapy"....and in that process I go into the concepts that seem to be at the root of the problem (primarily fear of loss and the loss of self image or self esteem that goes with loss)....

 

Ultimately one has to have their house in order, meaning that you have to have a system that YOU have faith in....then you have to have a reasonable understanding of your own mental issues, and finally you need a way to manage your emotional response as you trade

 

For those interested the first step is to identify the problem you have....accurately

 

The next step is to learn about yourself and how YOU respond to the stress of trading

 

in that process you learn to anticipate (and to "map" out) the negative responses once you are filled on a trade

 

and then you put something in place to block or interrupt that negative "chain of responses"

 

At first it is time consuming and it may seem difficult, as you progress and are able to better manage your emotions, it becomes automatic....

 

The model is much like leaning to drive....at first it seems daunting and difficult and you have to pay attention to what you are doing...later as you have more repetition, you can drive and maintain a conversation with a passenger....

 

Hope this helps

 

Steve

Edited July 21, 2012 by steve46

[johnw 10]

Ive spent a good deal of time with students trying to model the "right" mindset

 

and an equal amount of time recently learning a method that helps retail traders to insulate themselves from the stress of managing a trade.....

There are two parts to the method....one is breath control and now that I have seen it work, I teach it to every student...and the second is what I call "talk therapy"....and in that process I go into the concepts that seem to be at the root of the problem (primarily fear of loss and the loss of self image or self esteem that goes with loss)....

Ultimately one has to have their house in order, meaning that you have to have a system that YOU have faith in....then you have to have a reasonable understanding of your own mental issues, and finally you need a way to manage your emotional response as you trade

For those interested the first step is to identify the problem you have....accurately

The next step is to learn about yourself and how YOU respond to the stress of trading

in that process you learn to anticipate (and to "map" out) the negative responses once you are filled on a trade

and then you put something in place to block or interrupt that negative "chain of responses"

At first it is time consuming and it may seem difficult, as you progress and are able to better manage your emotions, it becomes automatic....

The model is much like leaning to drive....at first it seems daunting and difficult and you have to pay attention to what you are doing...later as you have more repetition, you can drive and maintain a conversation with a passenger....

 

Hope this helps

Steve

 

hi Steve,

 

Welcome to the world of Qi (chi) or as you describe it ..'breath control'

Asia knows it by various names according to culture, but essentially it is 'life force'

If you want to give your Students and Yourself a real edge, then I suggest you learn to cultivate Qi .. it will set you apart from the others.

 

Thoughts such as "block or interrupt that negative "chain of responses" will disappear over time as you remain only in 'the now'

In fact positive and negative will disappear... simplicity will rule the day.

[andysteven 10]

Doing daily home work before start doing trading and that can actually build your focus point on the stock where want to put the money, because it will help you make profit or loss so that you can learn from them and take proper precaution in future. And as per the post i think that right mindset is always beneficial as it will help you to avoid greediness, and thats the very common disease for the intra day traders.

 

Trading Range Stocks

[TimRacette 11]

I agree, and in my experience mindset is everything. Just think about the people you know who are really good at sports, most likely they succeed at a lot of things they attempt. I believe trading is the same way. After countless conversations with other traders, real estate investors, small business owners, and entrepreneurs I take away the same idea. They have created a winning mindset backed with persistence and that drive or passion for what they are doing. That's my take on it anyway. Good thread.