Trading Mindset

Improving Your Trading Mindset and Behaviors

What’s your trading mindset? While there are certain rules you need to follow to be successful as a day trader, the not-so-obvious ones will be your downfall. These subtle and easy-to-overlook traits, such as your trading mindset, will make or break you as a trader.

Don’t feel bad, as many, if not all, are born without the skills to succeed in stock market trading. The successful trader will identify where they have shortfalls and will work on improving these personality characteristics.

With this in mind, we’ll discuss six mindset traits that I think are crucial for your success as a trader. As you’re getting your trading mindset together, four tips all new traders should follow can help you navigate.

1. Discipline

One of the benefits and downfalls of day trading is the sheer number of trading set-ups available. Even if you could take a trade, it doesn’t mean you should.

While the number of potential trades in a single day can number in the thousands or more, not every one of these potential trades should or could be taken. So, what is the solution? A strategy or a trading plan clearly outlines when you’ll enter and exit the trade.

Setting a strategy and sticking to it requires discipline. The patient trader will not be distracted by elements outside the personal trading strategy.

Think of it as having a bad case of shiny object syndrome. Just because some “guru” shouts that they are going long on Facebook doesn’t mean you should. 

You have no idea what their trading plan entails or, better yet, their risk tolerance. Thus, having discipline means you stick to your strategy. What works for her might not work for you.

2. Patience

Closely related to point number one above. Jumping into a trade too soon or exiting it too quickly can mean the difference between success and failure in your trading experience.

Patience and discipline are related, as the trader must know how to wait for the right moment before taking a trade. It takes patience to wait for the right entry and exit points.

 New traders often tend to rush their actions and end up struggling to meet their goals. If it means sitting on your hands so you don’t get trigger-happy, by all means, sit on them.

As the wise traders at Bullish Bear’s say, “Patience equals profits.” Make sure to check out our blog on volume price analysis.

3. Flexibility

Even if you have traded for years, every trading day differs. As a novice, this can be problematic if you’re trigger-happy to enter the market, relying only on a textbook example of a selected strategy. This may have been me once.

Nevertheless, in some markets, some trading strategies don’t work. One example I can think of off the top of my head is attempting to trade a reversal in a trending market.

If you’ve tried it, you know that it just doesn’t work. This could be due to numerous variables like volatility, the strength of a trend, or a range size.

Let’s be clear: successful traders operate with a trading strategy. However, some market conditions require more adaptability than their original plan would call for.

The experienced trader with the correct mindset learns to look at daily market conditions before entering a trade. 

Trading Mindset

4. Being Thick-Skinned

If there is one certainty in the market, it’s the inevitability of unsuccessful trades. It’s essential to recognize that not every trade will be a home run.

Your mental attitude is important when you’re at the bottom of the 9th, with two strikes against you. Are you going to break under pressure?

More importantly, how are you going to react when you strike out? Are you going to quit when things don’t go your way? I sure hope not.

If you lose focus after a losing trade, you may become disheartened and make wrong decisions, making matters worse. Follow your trading rules.

The takeaway here is the ability to move on after a loss or a series of losses. Sometimes, being tough mentally means determining that you should not trade for a while.

I’d be remiss not to mention that most traders will inevitably encounter a string of losses at some point.

Most market professionals recognize that their success depends on winning slightly more than they lose. Trading is a percentage game; you don’t have to win 100% of your trades.

5. Self-Reliance

Most novice traders will rely on instructions and tips from outside sources. These resources may include reading, watching videos, or finding a mentor like Bullish Bears to help you understand the market.

After a time, though, a sense of independence and self-reliance must be developed. You must learn to identify when to place a trade and when to exit the trade.

Without a sense of independence, weak-willed traders may spend much time looking for one mentor or strategy to be the magic route to riches.

When we depend too much on others’ skills or knowledge, it is a recipe for failure. Independence and self-reliance mean taking responsibility for your actions and decisions in the market.

Aside from that, becoming independent means developing a trading mindset and style that considers your strengths.

Please read our blog on the fear index explained. It may help you become self-reliant.

6. Forward Thinking

Constant monitoring of the market and how it moves is another key to your success. As in a chess game, moves are plotted well ahead of the actual move.

Stock prices are constantly moving, and your response (plan) must evolve continually. The key elements of an entry point, stop loss, target price, and management of the position’s trade and size are all part of a successful strategy under various conditions.

At any point in your trading day, you should think about how you will react under different scenarios. Writing down aspects of your trading strategy is one way to do this.

If you know your plans under various conditions, you won’t lose a trade because you won’t be sure what action to take under a particular set of market conditions.

Planning means you can respond quickly when you need to. Potentially calamitous events can damper your trading success, which is why forward-thinking is important.

Keep practicing advanced viewpoints until they become second nature. In plain terms, plan for the worst and hope for the best.

Final Thoughts: Trading Mindset

I’m fairly confident that most individuals who go into day trading are not born with the proper trading mindset, and that’s ok! It is more likely that the individual will count only a few and must be able to dedicate themselves to work hard to achieve the others.

Day trading is difficult, but it is not impossible. The good news is that learning to obtain the missing traits is possible. Day traders depend on a pattern of identifying the missing qualities and working to offset them with strengths.

You can begin the process by doing an honest and comprehensive inventory. You will need to identify those strengths and weaknesses affecting how you trade.

Looking at each personality trait above will lead you on a path of self-discovery, which will benefit your day trading experience.

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