Mental State

The optimal mental state that a trader must exhibit evolves from a willingness to take a deeper look behind what is heard and seen in the market’s language on a daily basis.  That language is spoken by opinionated market participants but more importantly by the market itself.  The trader’s mindset is one that develops into speaking the same language as the market and being able to respond without thought, much like individuals do in normal conversation.  Whether this language is in the form of Tape Reading, Technical Analysis or any other approach to trading is inconsequential.  The reality of the message that is being told is what must be learned. 

The way to learn the language of the market is to rid yourself of pre-conceived ideas coming into the business.  Also a trader needs to evaluate and filter out market information that is being presented to them by external sources such as media, analysts and other avenues that disseminate information.  With evaluation and understanding, it will be easier for a trader to weed out misinformation.  By doing so, traders can realize that opinions being offered are either a direct result of a lack of real market experience or are a means of instigating a desired reaction by preaching to the masses.  When an amateur trader enhances his mindset to that of a professional, it is an amazing enlightenment to the business of trading.  They exhibit many incredible traits that many successful traders possess.  Furthermore, the more these traits become apart of you, the easier it is to figure out those amateur traits that still reside in others.  By doing so, you can choose whose opinions you wish to interact with and whose you feel are simply being directed from a lack of evolution in a trader’s necessary progress. 

On the opposite side of the trade is the amateur trader.  The amateur is not just a trader that has been in the market for less than six months.  There are people that have been in this business for many years that still think like amateurs.  They tend to feel like they have to be in the market all the time.  There are conspiracy theories among Market Makers that have the intention to solely hurt specific people.  They do not adhere to strict stop loss regiments.  They switch strategies and alter rules in a trade to fit their expectations of their current position instead of taking the loss and moving on.  They feel that each loss is a personal reflection upon their character.  They worry about telling others they lost money no matter how big or small for fear of ridicule.  They blame execution systems, trading brokers, routing platforms and anything else they can to prove that it wasn’t them that was wrong.  From these thoughts, they fail to progress.  They continue to exist to provide resources in wealth to those that have chosen to progress to the professional level.  They fail to research, execute and apply their trading strategy when the process demands a response.  They hesitate to trade their system and refuse to adapt and stay current with how that system may be changing.  Simply put, they do not offer themselves the chance to progress into a consistent trader.

A professional trader will first and foremost get rid of his or her ego.  Ego lead decision making will cause much heartache as you sit and wait for the market to finally do what you knew it would.  The market itself is never wrong.  It simply tells you what it’s doing and you listen to it.  They realize that the market moves in an illogical manner meaning that good news doesn’t always provide an upward movement. You can’t persuade it to move in the direction you want.  You do not have that control.  You do however have control over yourself and the actions that you take.  A professional trader will wake up each morning waiting for that bell to ring because he knows it will feed him for a lifetime.  A professional trader knows that he can not be right 100% of the time and must take losses accordingly.  A professional trader understands that the money itself is not the reason for the trade but rather it is the trade itself that is the draw.  The money is simply the reward for responding to the trading plan effectively.  The professional trader realizes that each trade is a new learning experience, one that has great lessons learned.  The professional trader knows when to be aggressive and when to passive.  The professional trader knows that he will never know everything about how the market works.  This person does not displace blame to anyone or anything for a negative action that occurred in the marketplace.  They take full responsibility for their trading with both profits and losses.  Their approach is sober and realistic.  There are no fantasy players that are somehow out to solely ruin their careers.  There are no conspiracy theories.  There are only simple positive beliefs about life and the language of the market being spoken.

From these beliefs, the professional trader will develop a confident and pleasant attitude towards the market.  They will utilize a trading plan effectively both with profits and with losses in an unemotional and thoughtless state.  Their relationships with market participants as well as in their personal lives are filled with happiness and charity.  Their overall physical and mental health will become finely tuned to participate in the markets on a daily basis with the optimal mindset to make profits to fulfill their dreams. 

The right mindset needs to be implemented into your plan.  Simply knock down the barriers of the ego and learn that you don’t know everything.   Once a trader realizes that he is just a pawn in the midst of dragons, it is at this point that they can begin to progress to that state of an optimal mindset.  This will take time and determination, but it is a necessary path that a trader needs to endure if they wish to remain in this business for the long term.  Trade without emotion and continue to learn a new lesson everyday.  Challenge others opinions based on your perceptions of the market with an open mind in order to bring to light wrong ideas and accept those thoughts that are true.  It is with this ultimate market understanding and an optimal mindset that a trader can bridge the approach of the mechanical trading style to the mental necessity to effectively trade it for many years to come.