How can you attain something you are striving for if you do not possess the proper mindset to achieve it? One thing I have learned through the years in my trading and business ventures is that if you want to become successful, you must control the narrative in your mind. If you constantly focus on negative things and let fear control your thoughts, you are going to go nowhere, fast. I would not have achieved the success that I have in trading, business or in my personal life if I was not consciously working to control the focus of my mind.
Today’s article is going to provide you with a way to start each trading day in the best mindset possible. As I’ve written about often, your mindset is critically important to your trading; if your head isn’t right, you aren’t going to make money at trading, that is a fact.
What we are aiming to achieve here, is to guide our thoughts to a place of positivity and confidence in one’s self. What you focus on and how you think is what determines your outcomes in life. There has never been a successful trader who didn’t fully believe they were going to be a successful trader beforehand. You need to work to cultivate the best possible mental environment to succeed at trading and this lesson will help you to do just that…
Why Affirmations Work
According to the website learnmindpower.com:
When you verbalize something and repeat it to yourself, it will influence your thoughts. This is why affirmations are successful. If you say to yourself, “I will have a great interview”, you will automatically begin thinking about your upcoming interview as a great interview. What you focus on, you attract so begin using affirmations to focus on what you desire.
There are three rules to remember when using affirmations:
- Always affirm the positive.
Avoid asking yourself, “What if it’s a terrible interview?” or thinking things like, “I’m so nervous”. These statements focus on the opposite of what you want. Be positive, and use words that reflect what you want to happen. If you want to be confident, use that word in your affirmation.
- Make your affirmations short and simple.
Use a short phrase, or one sentence at the most. Your affirmation should be like a simple mantra that you can repeat over and over again, without thinking.
- Don’t force yourself to believe it. Just say it.
You don’t need to force yourself to believe your affirmation, simply repeat it over and over and it will naturally have an effect on you. Repeating the statement many times will cause it to work for you.
Affirmations are simple, easy to use, and very powerful. Many professional athletes use them to perform well. Successful business people use them to close deals and run their businesses, and artists use them to be creative and come up with innovative ideas. You can use them too, in any area of your life.
Now that you understand why affirmations work and some simple rules to use them, let’s go over 10 trading affirmations you can use to not just start your trading day on the right note, but to help you develop a consistently profitable trading mindset:
1. “My mindset and mental skills are the key to making money in the market”
Perhaps the most important thing to remind yourself of everyday is just how important your trading mindset is in relation to your performance in the market. As I said in a recent article on trading educator Mark Douglas, one of the most important things he wanted to convey to traders was that even if your method is a high-probability method, it’s the proper execution of that method that you need proper mental skills for. If you don’t have those mental skills, even a winning strategy will lose.
A lot of people seem to be unaware of the fact that they are trading with a mindset that is inhibiting them from making money in the markets. Instead, they think that if they just find the right indicator or system they will magically start printing money from their computer. Trading success is the result of developing the proper trading habits, and habits are the result of having the proper trading psychology. – Nial Fuller
2. “Trade and think like a ‘Baller”
Continuing with theme of positive thinking and ‘fake it till you make it’ mentality, you really do need to believe in your ‘heart’ that you will become a successful trader, a baller, so to speak. The only way to achieve something is to prime your mind to achieve it, because your mind directs your actions. If your mind believes you can achieve something, then it will direct your behavior to turn those beliefs into actions and those actions will become habits, the habits that lead to consistently profitable trading.
To read more about this, check out my article on how to trade like a ‘baller’.
3. “Trading is a game of probability, not certainty”
So many traders get caught up believing every trade will be a winner, and they forget that there is simply no such thing as a 100%-win rate. It’s critical to remind yourself you will have losing trades, so that you do not become over-confident and end up risking too much or trading too much. You must remember that trading is a game of probabilities, not certainties. For example, even if you win 75% of the time, it means you lose 25% of the time, right? The CATCH is; you do not know WHICH trade will be one of the 75% winners and which will be in the 25% losing camp. It also means, that you could conceivably have 25 losing trades in a row, out of 100. You probably wouldn’t, but you could, so knowing that it’s a possibility to have a large string of losers, how are you going to approach risk management?
Are you going to manage your risk like every trade will be a winner? Or are you going to be realistic and try to remain neutral to the outcome of any one trade? If you are going to do the latter of those two, it means you would absolutely dial your risk per trade down to a dollar amount that you could stand to lose multiple times in a row, without become emotionally or financially damaged. Remember, your trade outcomes are randomly distributed, please click on the link if you don’t know what that means.
If you have a weighted coin that will be heads 70% of the time, you still don’t know the sequence of heads and tails, all you know is OVER TIME 70% of the flips will be heads.
4. “I always use a stop loss to protect my money”
First off, you must use a stop loss on every trade, always. I get emails nearly every week from traders telling me they either don’t use stop losses or asking me if they should use them. It only takes one huge move against you without a stop loss in place, to destroy your account. So, just accept right now that you MUST ALWAYS have a stop loss in place.
Second, you must know how to place stop losses properly. I’ve written multiple articles about this topic (one I just linked you to) and I also discuss it in-depth in my trading course, so you can study those resources to learn more about it. For now, here is a quote about stop losses from one of the trading legends I wrote about in my Market Wizards article, Bruce Kovner:
“Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I’m getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis.” – Bruce Kovner
5. “I enjoy taking profits, I will take the money when it’s there”
This one may seem odd, but it’s important to remind yourself you need to take profits. Many traders hold and hold their trades until they turn into losses. In a recent article on this topic, I wrote about why you should ‘take the money and run’, regarding cashing out of profitable positions and booking profits. Too often, traders have no logical exit strategy in place and they just end up holding trades for way too long.
I would even recommend, in the beginning stages, you look to take 1:1 risk: rewards, rather than holding for big profits all the time. This will help to build your trading account as you will hit more winners, but more importantly it will build confidence in your abilities and the method you are trading and will also allow you to get a good view of how accurate your trading edge (entry strategy) is over a large enough series of trades.
6. “I will not be influenced by news or other outside sources of ‘noise’”
As I have written about previously, fundamentals and market news events are typically gigantic wastes of your time and energy and usually result in over-analysis, over-complicating things and as a result, losing money. But, you don’t have to take just my word for it, here is what trading legend Ed Seykota has to say about fundamentals:
“Fundamentals that you read about are typically useless as the market has already discounted the price, and I call them “funny-mentals”.
I am primarily a trend trader with touches of hunches based on about twenty years of experience. In order of importance to me are: (1) the long-term trend, (2) the current chart pattern, and (3) picking a good spot to buy or sell. Those are the three primary components of my trading. Way down in a very distant fourth place are my fundamental ideas and, quite likely, on balance, they have cost me money.” – Trading legend Ed Seykota
7. “I will let the market do the ‘work’, I will not meddle in my trades unnecessarily”
The market is going to move up, down and sideways, it’s up to you find high-probability entry and logical exit points. What happens in between the entry and exit is typically what separates the successful traders from the masses of sheep / losers. Successful traders are not meddling in their trades unnecessarily, they are letting the market do the ‘work’.
Markets move, so let them move after you enter. Do not sit there staring endlessly at the charts in hope you are somehow going to will the price into moving in your favor. You are there to read the price action and find potential entries that MIGHT yield profit, not to try and control the market, which you cannot do, so do not behave as if you can or you’ll just end up losing money.
8. “I will be a professional trader, not a professional gambler”
Are you going to be a gambler or a trader? Gamblers play games of chance and understand they are not making skilled, high-probability decisions. They do not have planned approaches or methods (most anyways). It is incredibly easy to click your mouse, enter a trade and get that injection of adrenaline that makes you feel alive (just like a gambler), but is that going to lead to long-term success in the markets? Well, I think you know the answer to that.
I suggest you focus on learning an effective trading approach like price action strategies and develop that into a trading plan you can implement to make yourself into a skilled trading machine instead of a random gambler with no discipline.
9. “Trading can be simple and easy, I will make it as such”
Trading doesn’t have to be complicated or difficult, yet many people make it that way. You must remind yourself that it can be simple and easy, and you start by learning a simple yet effective trading method like price action. All you really need for technical analysis is an understanding of price action, trends and levels, or T.L.S – Trend, Level, Signal, something I teach in-depth in my trading courses.
You don’t need messy indicators, period. You don’t need messy charts or messy thinking (fundamentals, news, etc.) All you need is your own mind and an understanding of T.L.S, money management and trading psychology.
10. “Trading success is not dependent on luck or intelligence”
Here is a good quote from The Turtle Traders co-founder, William Eckhardt on intelligence in relation to trading success:
“I haven’t seen much correlation between good trading and intelligence. Some outstanding traders are quite intelligent, but a few aren’t. Many outstandingly intelligent people are horrible traders. Average intelligence is enough. Beyond that, emotional makeup is more important.” – William Eckhardt
“In conducting the interviews for this book and its predecessor, Market Wizards, I became absolutely convinced that winning in the markets is a matter of skill and discipline, not luck. The magnitude and consistency of the winning track records compiled by many of those I interviewed simply defy chance.” – Jack D. Schwager
If there is one key trait that trading success is dependent on more than any other, I would say it is persistence. Not everyone will succeed at trading, but of all that do, persistence is one thing they all have in common. You must believe the dream enough to turn that belief into action and action into habits, once you do that, you will be well on your way to becoming a professional trader.
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