It’s not news that psychology and trading go hand-in-hand.
Every profitable trader will tell you that the mindset they bring to their trading is the most crucial piece of the puzzle. Trouble is, too few beginning traders take the steps necessary to correct or improve their own responses to market behavior, and wonder why they aren’t able to trade as well as they hoped.
They don’t invest in their trading mindset.
This is a significant oversight, because psychology matters more in the markets than you probably think.
Systems like our new Overnight Fortunes formula, which spots explosive stock and options opportunities before they pop 420%… 385%… or even 1,453%, require strong mental stamina and trading discipline. You can’t be wishy washy when opportunities like this are at stake!
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But to get back to it, the fact is, trading psychology is a bit more elusive than trading techniques.
With indicators and chart patterns, it’s easy to see what mistakes were made and easier to correct these mistakes. The mind is much harder to get into or understand.
There are, however, some specific steps you can take to improve your reaction to market action and strengthen your trading psychology. Here are my two favorite mindset workouts.
Get Over Past Experiences by Changing Your Perspective
When you first start out trading you have nothing to compare the markets to. It’s easy to, once you experience some wins and losses, get stuck associating future trading experiences with what happened in the past.
Since most people start out losing money in the markets and don’t achieve success with their first trade, the mind begins to associate the financial market with negative emotions.
This is not good.
I know one trader who became so nervous at the thought of trading that he kept opening and closing accounts at different brokerage firms just to avoid making a wrong trade. He would find faults with every brokerage house he opened an account with, just so he could avoid actually making a trade.
It’s like someone who had a traumatic experience in the past and avoids behavior that consciously or subconsciously reminds them of the trauma that was suffered.
The best way to deal with this issue is to deal with it head-on. You have to reprogram your mind to see the market objectively, instead of thinking it is out to get you. The way to get over negativity toward the market is by decreasing your position sizes to a few shares at a time. Keep it small, and little by little as you begin to trade without much at risk, your mind will begin to reprogram and begin to respond to the markets in a positive way.
Rewire Your Mind to Change Behavior
Truth is, we’re all hardwired to behave in certain ways when we’re born. That’s just human nature.
We like to do things we’re rewarded for, and we don’t like to do things that we’re punished for. This same behavior is one of the leading reasons why some traders cut their winners quickly and ride out their losers.
The mind believes that by holding on to a losing position there is a chance that the position could come back. If the position comes back, then the traders obviously made the correct decision and therefore he is a good trader. Conversely, when traders are in a winning position they quickly take profits so that they can feel like they made the correct decision.
In both of these situations, the underlying concern is correct. Unfortunately, trading has nothing to do with being correct.
Most professional traders are correct less than 50% of the time. Profitable trading is based on risking winners so that they become bigger and liquidating losers quickly so that they don’t become bigger. Being right is the last thing professional traders worry about.
Once you understand that fact, it’s easier to look past what your brain “wants” and make smarter, more effective trades.
So if you can forget the past and rewire your brain, you’ll find success in trading. That’s all I want for you… is to be a successful trader. Even if you make just a dollar a week, then you’re a successful trader. Many people can’t even do that (make a dollar a week)!
Another thing I want for you.. I want to deliver to you our secret formula behind Overnight Fortunes. This top secret formula turned $1,000 into over $6 million in less than just two decades.. And I can only imagine what it could do for you.
Let us teach you this secret formula, so you can get the chance to turn your pennies into fortune overnight.
Also, what if you want to make a living as a trader? It’s a question I get asked all the time: is it possible to make a living swing trading? And the answer is: it depends. (I know, helpful, right?) But the truth is swing trading is like any other kind of trading—in that a number of factors are involved in creating success. Here are a few things you need to consider if you want to become a professional swing trader…