Trading should be profitable and enjoyable, not agonizingly painful (and costly). And for that to happen, for trading to become that way for you, a mental change, or shift, has to occur. Just knowing, or having some general awareness of, the necessary mindset for winning trading isn’t enough—you have to really know it, so that it is truly ingrained into your belief system and attitude. This is particularly true in regard to removing fear and emotional pain from your trading.

It takes some work. And most people aren’t willing to do that work. And that’s why they remain losing traders instead of transforming themselves into consistently winning traders.

A lot of traders view themselves as freely accepting the risks inherent in trading just by virtue of the fact that they place trades. However, an examination of their trading practices will quickly reveal that, in fact, their trading represents a desperate attempt to avoid risk and to avoid the possible pain of being wrong in trading. Winning traders truly understand and accept the inherent risk in trading, and that genuine acceptance of the risk enables them to trade free of either unwarranted fear or unwarranted overconfidence.

Newsflash: The market never gives you any painful information. What? That’s right, the market has never delivered painful—or joyful—news to anyone. The pain you may wrongly accuse the market of causing really exists only in your thoughts—in your perception of the data the market delivers.

You may perceive market information as painful, but it is not inherently so—that is not reality. The reality is that the market is always neutral. The information, news, data it delivers is neither inherently pleasant nor painful—it’s simply information. It’s only your interpretation, within your own mind, that characterizes the information as painful or joyful.

The market is neither for you, nor against you. The market is merely a market.

Get it straight, get it clear as a bell in your mind. Your perception, your attitude toward trading, is what determines how you interpret the information that the market provides—and therefore also determines whether you’re in the proper mental state to act intelligently (and profitably) on that information. It’s not the market information itself, but your mindset that determines whether or not you will most likely be able to take advantage of the information the market freely offers you.

There is a reason that winning traders are able to consistently make trading decisions that leave other (losing) traders in awe of how “brilliant” the winning traders are: Winning traders take in market information purely objectively. They don’t make the mistake of perceiving the information as either painful or pleasant. They don’t see the market news as either good news or bad news—it’s just news, plain and simple. They’re able to clearly and objectively see the opportunities for profit that the market presents. Their clear vision enables them to act logically, and without hesitation, and seek to take advantage of profit opportunities as they arise.

The flip side of the coin is that while they don’t perceive market information as painful, neither do they err in the direction of perceiving it as pleasant, becoming overconfident. That leads them to always practice strict money management—observing good risk/reward ratios, keeping losses small with appropriate stops—since they aren’t swayed by the illusion that the market is being “good” to them.

Clear vision, undistorted by emotion, either positive or negative emotion, is what makes winning traders capable of making consistently wiser choices than those that losing traders usually make.

It really all goes back to simply having a clear understanding of the reality of what the market is. It’s just a market—it’s not your friend, neither is it your enemy. It’s unfortunate that the phrase “beating the market” has become so commonplace and even popular. The idea of “beating the market” sets the market up as an enemy to be defeated, when that is not the reality of trading. The market isn’t trying to take your money, and it isn’t trying to give you money either. Again, the market is just a market—it provides opportunities for profit, opportunities that always go hand in hand with a risk of loss. Consistently winning traders have a clear understanding of these fundamental facts of trading set firmly in their minds, and they act accordingly—taking opportunities as they arise, and also always protecting themselves against the very real possibility of loss. It is solely your responsibility to accurately perceive—and logically, objectively act upon—whatever opportunities are presented by price movement in the market.

Winning traders are not overly fearful, and they aren’t overconfident either. Therefore, unlike losing traders, they don’t take wild risks, only genuine opportunities. They don’t get greedy, ever aware that the market may turn at any time. And their trading decisions remain logical and steady, regardless of whether their last trade was a win or a loss. That is the mindset of a winning trader.

It’s easy to illustrate the importance that perception plays in trading. Just compare whatever you perceived—saw—the very first time you ever examined a trading chart with what you see now when you look at one. The chart hasn’t changed—only your ability to see what is there has changed. But again, the really important factor is not your state of knowledge, but your emotional state. Fear—or its opposite, overconfidence—are devastating to good trading practice. Both of those emotional states distort one’s clear vision of the market’s action—and clear vision is the key to profitable trading.

Example: You’ve experienced a couple of losing trades in a row. What typically happens then? You become afraid of the market, afraid it’s going to take more of your money. You now hesitate, even when presented with the clearest opportunities for profit. Rather than focusing on the reality of the market’s action, you start to doubt the validity of the information being presented to you. You often depart from, or completely ignore, both the specific rules of your trading strategy and the basic rules of money management. You may experience further emotional pain when, having missed a trading signal due to hesitation, you then see the market “taking off” without you. Perhaps you then make the mistake of chasing the market—or you simply sit with your increasing emotional pain as the market continues to move, doing nothing. Your inaccurate perception of the market as “out to get you” has completely derailed you from good trading practice. The only solution to avoiding this erroneous path is clear vision of the realities of trading (such as the awareness that past losing trades have in no way altered the reality or legitimacy of future opportunities).

Bottom line

To become a consistently winning trader, one has to learn to clearly see the market and the opportunities for profit that it presents. Clearly seeing the market for what it is—realizing that it is not your enemy, not an objective threat to your well-being—enables you to avoid the fear and emotional pain that are so common to losing traders. Fear and pain that, in fact, are the root cause of many losing trades or missed opportunities.

Summary:

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Trading is not meant to be an emotionally excruciating or draining experience. Good traders trade objectively, logically, and do not let themselves be ruled by negative emotions that arise from misperceptions of the market.

 

P

The market is simply a market. It’s not out to get you, nor is it trying to do you any favors. The information the market provides is completely neutral in relation to your making a profit—or not.

 

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A proper winning mindset enables a trader to accurately perceive and act upon information presented by the market, rather than having his perception distorted by emotional interpretations of market data.

 

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Clear vision, born of clear perception of the fundamental realities of trading, is what frees winning traders to make consistently good trading choices.

 

 

We welcome your comments and questions, and appreciate you sharing this article with other traders.

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writer bio

JACK MAVERICK

Jack Maverick has over 20 years of experience in futures and forex trading, first as a broker and then as an independent trader.  He enjoys sharing the trading wisdom and knowledge he has gained from his own trading experience and from other successful traders.

 

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