If you’re reading this you’re probably struggling to make money in the markets and maybe you’ve even recently experienced a painful losing streak. Right now, trading seems “hard” to you, you doubt if anyone out there reallymakes consistent money from trading, and maybe you even feel like you want to give up. I know that you might be feeling this way right now because above all else, I’m a trader too, and I’ve felt what you’re feeling before. How did I move past all these negative feelings and finally attain success in my trading? To put it quite “simply” (pun intended), I simplified every aspect of my trading.
Before we proceed, I know you might be thinking the whole “simplify your trading” thing sounds cliché and that you’ve “heard it before” from me, and whilst that might be true, it does not change the significance of it. Most traders are their own worst enemy in the market, and no matter how many different ways I say that, it’s important to accept it and then to change it. Here are three very simple steps to simplify and improve your trading that you can begin implementing right now…
Step 1) Work on your attitude towards trading and life in general
One of my all-time favorite authors, Napoleon Hill, said that a “Positive mental attitude is the right mental attitude in all circumstances. Success attracts more success while failure attracts more failure.”
It’s one thing to hear the word “attitude”, people talk about it every day, but what does it really mean and how does it apply to your trading? A trader’s attitude refers to both his or her mental state of mind and the way he or she conducts their trading activities. It may sound slightly boring or even repetitive to hear someone say you need a “positive mental attitude”, but your attitude is probably one of thee most important factors that determines your trading results (both profits and losses).
Do you think when a person joins the Army, Navy or other armed forces that they are instantly going to conform and have their “shit” together? No new recruit enters the armed forces with the perfect attitude that they need to thrive there, they get shaped and molded over time through constant teaching from their superiors. When you enter the trading “battleground” it is no different; you are very unlikely to have the correct attitude and trading mindset right away. Instead, you need to make a DRAMATIC attitude shift; you can’t just sit around being the “same old you”; you have to reinvent yourself if you’re going to make it in this industry.
- What are the attitudes of great traders?
The attitude of a great trader is the result of someone with a generally happy life already. If you aren’t happy at home you won’t make money trading at home (or trading from a coffee shop, or anywhere else for that matter). It sounds cliché, but you really need to “get your own house in order” first if you want to make money in the markets. People who aren’t happy at home tend to think they will somehow “turn their lives around” by making a lot of money in the markets. However, as Napoleon Hill would agree with; your mindset and attitude determines your success or failure in any endeavor, and it’s no different with trading. Too many traders look to trading as a way to “fix” their lives or “escape” the job that they hate, but they are unaware that by looking to the market for these things they are already forging the wrong trading attitude and mindset.
Trading should not be something you view as a way to “fix” yourself or your life, but as a tool you can use to generate money AFTER you are already mostly happy and content…don’t look to the markets for your happiness, that’s something you have to find elsewhere. The reason why it’s so important to be content with your life prior to trading is because whatever you are feeling will generally be reflected back to you in your trading. If you’re angry, depressed or sad, you are not going to have enough self-control or self-respect to be able to stick to a trading plan or manage you risk properly.
Thus, great traders are people who already have their “shit” together for the most part. I’m not saying you should already be really wealthy before you start trading, I’m just saying you should be a generally happy person and not feel like you “need” to trade to fix something in your life or to be happy. The less you feel like you need to trade the less pressure you will feel and the more clear and crisp you mindset and attitude will be as you trade the market, and this gives you the best chance to make money.
- How to develop the right trading attitude
Attitude develops out of routine…in fact, everything develops out of routine…cigarette smoking, gambling, etc…all of these things develop from a repetitive routine, and repetition turns into habit and habits are very hard to break, as you probably know.
The good thing about attitudes is that just as we can develop bad ones from routinely doing bad things, we can also develop good attitudes from good routines. For example, if you try to surround yourself with positive thinking people, you will probably start to become more positive yourself. Changing your attitude towards trading and life in general begins with changing your negative self-destructive routines. Whatever these self-destructive routines may be (you know what they are), the sooner you begin to change them the sooner you will start developing the attitude you need to become a successful trader.
Changing your attitude towards trading and life is totally within your control. Much of the reason you’re probably losing money now in the market is because you have a bad attitude as the result of self-destructive habits and routines. Feeling angry at the market and over-trading because you feel like you need to make back lost money is a really bad attitude and will result in even more losses in the end.
If you reinforce positive trading routines you’ll become addicted to them and this will naturally grow the right trading attitude. Do whatever you need to do to make this happen…put yourself around successful traders more often (whether it’s online or offline), learn from mentors like myself, become sickeningly disciplined and almost obsessive about changing your attitude and you will soon see improvement in your trading.
Step 2) Become a “tight ass” trader
Sometimes being a “tight ass”, aka being “cheap” or “tight” with your money, is a good thing, sometimes not. In regards to trading, it’s typically a good thing because it simply means you’re being conservative with your capital and not wasting it on stupid trades that you know aren’t part of your trading strategy.There have been scientific studies that show that women typically make better traders and investors than men because they are less likely to make testosterone-fueled trading decisions that men tend to make. Unfortunately for the ladies out there, men seem to be more attracted to trading and I feel like many women who would be good traders miss out on the opportunity because of the stigma that trading is a “man’s” profession. Ladies, this is your wake-up call…you have a NATURAL ADVANTAGE in trading the markets, get interested!
In fact, most men who lose money in the markets do so because they take too big of risks, in other words they aren’t frugal like more women tend to be. Don’t get me wrong, I’m not saying that women don’t take risks, because clearly you have to take on risk if you want reward and many women do indeed do this. However, women do tend to make more calculated trading decisions and tend to be more frugal with their trading capital than men, and this is a very good thing that works to their advantage.
Thus, the second step to simplifying your trading is to be a “tight-ass” in the markets. Be very careful with your money and don’t ignore the risk of losing your money every time you trade. The way to build your trading account is to do it slowly over time; you hit a big winner here or there and it pushes your equity curve higher, the key is that after these winners you have to be very careful and “tight” with your trading capital so that you don’t give all your profits back…then eventually you’ll hit another nice winner. This is how to successfully grow a small trading account over time, but it can’t be done if you’re not a tight-ass with your trading capital.
Step 3) Give complex trading methods a “wide berth”
Finally, perhaps the easiest step to simplifying your trading is to just ditch complex trading methods like Elliot Wave Theory, Gann, Indicators, the position of the stars, etc, etc. These trading methods are not necessary and they will probably hurt your trading performance much more than help it. It’s always been amusing to me that the easiest part of trading…analyzing the chart and finding a high-probability entry, is the part that traders make the most complex. It’s critical that you trade with a simple strategy like price action so that you aren’t unnecessarily confusing yourself and so that you can see clearly what’s happening on the chart. Trading in a simple de-cluttered manner like this is critical not only to accurately see what the price action on the chart is doing, but also to develop the correct trading mindset and attitude that we talked about earlier.
If you are currently using a complicated trading method and you want to simplify your trading, follow the steps discussed above
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