The mindset of a trader

The mindset of a trader

Our focus will be on the behavior exhibited by an individual or trader. so what are the behaviors and Mindset of a Trader?

1. Love taking losses

Trading is about taking both losses and profits. You cannot have a strategy with 100% win rate. that’s impossible. any Successful strategy has a percentage of winning trades and a percentage of losing trades.

If you have a good strategy, it is possible to achieve a 65% success rate (batting average) and a 35% failure rate in trades. To make the strategy effective, you would aim to win 65 trades out of 100 while losing 35 trades out of 100.

A successful trading strategy must account for the possibility of losing trades.

Successful traders effortlessly handle losses, as they may encounter a day where all their trades result in losses. They comprehend that it is an integral aspect of their strategy, expecting a specific percentage of losses according to their plan. They accept such days as normal and do not dwell on them.

It’s a mathematical reality that in trading, you will experience both wins and losses.

“At the end of the day, you are paid to take losses, you are not paid to take wins, taking wins is easy anybody can do it. you are getting paid to do what other people cant do easily which is taking losses.” – Mohsen Hassan

2. Always testing new things out

Successful traders will always working on something new, always testing something else.

While successful traders primarily rely on their profitable strategy, often referred to as their “Bread and Butter,” they also explore alternative approaches. However, they don’t implement these new strategies or variations at full scale. Instead, they test them with a smaller amount of money, which they refer to as “Gravy Strategies.”

So These traders possess a primary strategy, their “bread and butter,” which generates significant profits. In addition to that, they have multiple “gravy strategies” that serve as supplementary approaches.

This holds significance because there are instances when the primary strategy ceases to be effective, while one of the gravy strategies generates higher returns. In such cases, the traders replace their main strategy with the successful gravy strategy.

They are not completely testing new strategy, sometimes they test the same strategies with different variations.

It’s absolutely important to get your hands dirty test new things out, try different approaches in order to remain success in trading.

3. Focus on strategy not money

Money is an outcome of your performance.

If you just focus on making money, you are not gonna succeed, but if you focus on being great at your business money will come eventually. Its the same in trading, if you focus on making money you going to do things that you shouldn’t do. but if you focus on strategies / trading correctly money is just gonna be an outcome of you trading well.

Successful traders always things about running their strategy efficiently possible, they don’t care about how much they are making. because they know that if they do it correctly, money just gonna follow.

Taking losses when they have to, letting the trades run according to strategy, playing the game correctly as they can.

There are certain YouTubers who claim that they stop trading for the day once they reach a specific target, but this notion is misleading.

The amount of money you make should not dictate your trading strategy. Irrespective of monetary gains, you should diligently adhere to your strategy and stay in your position if it aligns with your strategy’s guidelines. Likewise, if your strategy signals an exit from a trade, it is imperative to act accordingly.

Focus on Strategy and let that guide your actions, so money has no influence in what you are doing.

While the aforementioned three behaviors are crucial, it’s worthwhile to briefly explore a few additional significant traits.

Additional significant traits of a trader

Discipline:

Successful traders maintain a disciplined approach to trading. They adhere to their trading plans and strategies, avoiding impulsive decisions driven by emotions or external factors.

Patience and persistence:

They understand that trading success is not achieved overnight. Successful traders remain patient and persistent, willing to endure temporary setbacks and focus on long-term profitability.

They know that they don’t have to be in the market everyday.

Emotional control:

They have the ability to control their emotions, especially during volatile or stressful market situations. Successful traders make rational decisions based on analysis and avoid letting fear or greed drive their actions.

Adaptability:

They possess the ability to adapt to changing market dynamics. Successful traders adjust their strategies, techniques, and approaches as market conditions evolve, ensuring their methods remain effective.

Consistency:

They maintain consistency in their trading approach. Successful traders follow their strategies diligently and avoid impulsive deviations or chasing after quick gains.

Record keeping and analysis:

They maintain detailed records of their trades and regularly analyze their performance. Successful traders review their trades, identify strengths and weaknesses, and make informed adjustments to enhance their future performance.

Confidence and self belief:

They exhibit confidence in their abilities and have faith in their trading strategies. Successful traders trust their analysis and decision-making processes while staying humble and open to continuous improvement.

Conclusion

It is important to note that these behaviors are not fixed traits but rather skills that can be developed and honed over time with practice, experience, and a commitment to personal growth.

These behaviors are cultivated through the implementation of a trading plan and unwavering commitment to follow it. In future discussions, we will delve into the details of how traders develop and adhere to their trading plans.