In this article we share facts that no one is willing to share with beginners! Understand the hidden psychological traps of trading and investing.
Significant mindset differences between consistently profitable traders and novice traders
There is this old saying that life is about journeys and not about the destinations. Here’s a maxim that will keep and preserve you in trading and investing in the financial market. Losing money in the financial market causes such a terrible feeling that it borders on despair. You make a little money, and instead of making more money, you end up losing the one you made. This can make you feel angry or frustrated with your trading results. Would you like to know the way to avoid negative thoughts and emotions? What if we, as an online trading academy told you there’s a way to avoid feeling so defeated as a result of your trading performance? The primary thing you would need to do is to change your trading and investing mindset. When your attention shifts from money to your trading process, then the feeling of despair can be thoroughly well managed
The hidden psychological trap of trading and investing
Here’s a simple fact that no one is willing to share with beginners: You will not make money in forex, futures, and stock trading if your singular purpose for participating in the financial market is money. This is a type of mental trap or cage. To succeed in the trading arena, you need to have a genuine interest and passion for it. It should not be about the money to you, but it should be about doing something you enjoy and love. If you lack this genuine interest, you’ll end up just focusing on the money, and this will not give room for the best trading and investing mindset.
Think about it this way: When you are focused on money, you have a higher probability of overtrading, and it is a well-known fact that overtrading is a cause of account blowout. If you allow greed and the compulsion to trade get the best of you, you’ll eventually end up gambling in the financial market instead of trading. Focusing on money or profit will also make you risk too much on each forex, futures, and stock trade. This is one sure way to get overly emotional with trading. When you risk more than you can comfortably lose, you get overly attached to the trade, which will result in you making irrational decisions out of fear. Decisions made from a place of fear and emotions instead of logical reasoning based on Supply and Demand imbalances are usually not the right decisions, and they cause more harm than good. Instead of leaving the trade alone, you’ll end up so obsessed with it that you might be staring at your forex, futures, and stock trades all day long.
If you shift your focus from profits and dollars, you will automatically have more mental capacity and time to devote to becoming a consistently profitable forex, futures, and stock trader and investor. It would be easier to make money as a consistently profitable trader compared to a mediocre one, but most people don’t think about it that way. They are generally more focused on making money, which cannot happen except you have developed yourself into a well-groomed and disciplined trader and investor.
We mentioned at the beginning of this article that trading and investing in the financial market is about the journey, not the destination. What this implies is that to become a consistently profitable trader, you need to focus on the processes involved in becoming a forex, futures, and stock trader and not just the monetary aspect of it. Once you shift your attention to becoming a consistently profitable trader, money would automatically accumulate because you are building the right trading habits.
Consistently profitable traders and investors know that emotions are enemies of success
Every professional trader and investor has come to realize that being overly emotional can be disastrous. It is typical human nature to get a bit agitated when our money is on the line. However, professional traders know that it would be more detrimental to do so.
The most effective and rational way to manage your risk is to make sure you never risk more than you are willing to lose. You need to realize every forex, futures, and stock trade and investment is a risk; it could go both ways, and you must use this knowledge to adjust the amount you are willing to risk. There is no specific amount for this because only you can decide how much you are willing to sacrifice. It would be best if you always stuck to your predetermined amount. To control your emotions when you either win or lose, you would have to adjust your per-dollar risk amount to suit your own point of tolerance.
The importance of confidence cannot be overemphasized, and professional traders and investors do not second guess themselves when they want to enter a forex, futures, and stock trade. They follow their already predetermined requirements and know exactly what they are looking for. Professional traders understand that success is not measured by how much money they have in their trading account but by how well they are sticking to their Supply and Demand trading strategy. It would be best if you stuck to your Supply and Demand trading strategy for you to see results. There will be a few losses along the way, but the most important thing is to continue improving your trading edge.
Professional traders and investors do not ruin their own trading edge
One constant noticeable similarity between all failing or horrible traders is the attitude that signifies the fact they think they know precisely how the financial market is going to move. Sometimes they even act like they can control the financial market. You would notice them changing their stops, and fidgeting with their trade instead of just letting it be.
The simple truth is that we do not have any idea of how the financial market would actually move. We put probability in our favor based on Supply and Demand imbalances, which could work against us. Professional traders and investors put this simple fact in mind and constantly remind themselves of it. Amateur traders, however, don’t think about this fact at all.
Professional traders simply just let their trades be; they have come to understand that the financial market would act however it wishes to, and changing things in an open forex, futures, and stock trade won’t necessarily change that. There might be few instances where a trader and investor might exit a trade early, but most professional traders allow the trade to run its course without any interference. Professional forex, futures, and stock traders adopt a “set and forget” trading method. This is about developing the right mindset, and you need to understand that if you keep exiting trades without following your rules or before you reach your set target, it will accumulate and affect your overall profit, and your trading confidence will also take a hit.
You are probably already acquainted with that feeling of having a loss or breakeven where you would have had a solid win if you had just allowed your trade to run its course. Professional traders understand that emotions tend to run high during a trade and that they were a lot more rational before they entered the trade, so they trust their initial instincts and push through.
Your trading and investing mindset forms the foundation for your trading habits
The way you think would ultimately transform into your trading habits. The mind controls everything. If you think you have the ability to avoid losses, you’ll end up not making use of stop-loss, or adding to a losing trade. If you believe the financial market is yours to control, you will soon start overtrading and over-leveraging, which will result in your account blowing out.
Professional traders have respect for the financial market. They are confident but not overconfident; they know they don’t know everything and are at peace with it. Professional traders are more concerned about trading processes than about profits and loss. They think about trading in terms of looking for obvious Supply and Demand setups and making plans. Thinking in this direction helps form profitable trading habits.
Professional traders are patient people; they plan their forex, futures, and stock trades in advance and follow through with their plans with no emotions in the way. Screen time, experience, and unpleasant lessons will eventually refine you as a trader and investor over time, but only if you have the right foundation to build it on.
Professional traders have a genuine interest in trading
Professional traders are intrigued by trading, and they view it as a challenge to overcome. It is an ultimate mental test for them. Only a very small fraction of people can trade and invest successfully over time. If this knowledge does not intrigue and excite you, then trading and investing is not for you.
Forex, futures, and stock trading is not a fast money trick, regardless of what you’ve heard. If you are successful at the end of the day, it is because you have taken your time to grow and be passionate about trading and investing in the financial market. Having the right attitude towards trading will help you make a lot of money. However, for you to be profitable, you need to look away from the money and focus on developing the right trading mindset and habits.
Trading and investing is very similar to a lot of other professions. To become a world-renowned surgeon, do you focus on the money or the process? A good surgeon must focus on the process and training involved rather than the money to be made. The money comes as a reward for their diligence and hard work. Trading is also the same way!
You do not become a consistently profitable forex, futures, and stock trader because you want to. You become a profitable trader by putting in the work required to develop yourself. Money is simply the reward for that, not the motivation.
Your focus should be to become the best trader possible. Money will definitely come, because as a good trader, making money will be effortless. To equip yourself with the right skills, we encourage you to check out our lifetime program for more information.
If you want to learn more about professional trading and investing across multiple asset classes such as forex, futures, and stocks, please sign up HERE for free at our online trading academy www.onlinetradingcampus.com and get access to a free three-hour introductory course.
Author Bio: Bernd Skorupinski teaches the undiluted truth about trading and investing at Online Trading Campus and takes you through what it takes to be a consistently successful trader. His favorite moment as a trading mentor is the way peoples’ eyes light up with excitement and confidence when they understand how Supply and Demand trading strategy works and how it can help win in the trading arena. He believes in building core values and discipline that ensures his students do not succumb to the pressures and temptations of the market. He very much believes in following plans and strategy through. If you want to know more about the author Bernd Skorupinski please read HERE