Day trading is an exciting and high risk business to learn. When starting out you should fully understand that only risk capital should be employed which the loss of will not complicate or upset your lifestyle.
In this important article I am going to try to assist you in realizing how absolutely vital it is to have three key elements of trading in place to be a success. I am going to place emphasis on the third element in this article today which I call “The Traders Mindset”.
In addition to my views and experience from day trading over 30 years I am also going to introduce you to experts I feel can assist you on your trading journey to success in developing a traders mindset.
Those 3 key elements of day trading are:
- You must have a solid working knowledge of your trading platform and how to execute trades rapidly. You should also fully understand how to change orders, cancel/replace orders, flatten out your positions and apply automated brackets to be sure you always have a stop on your position with your broker. Be sure to have your phone on speed dial to your broker in case all this sacred internet technology stops working for some reason in the middle of one of your trades.
- You will need to trade with a proven, tested, highly accurate and well researched day trading system that has a long time track record of success. You can find one of these rare gems (like my Boomerang Day Trader system) or take the harder route of “trial and error” to develop your own. If you choose this route just be prepared for many years of work, frustration and losses in trying to develop such a system. Oddly, although this second key ingredient is so important, I have found over the last three decades of trading and assisting other traders that this vital element is so often overlooked.
- You will need above all a crystal clear working knowledge of how to develop and maintain a “Traders Mindset”. This means knowing and understanding fully how your brain will react to the trading business and its ups and downs during your career of this high risk business. What I find truly astonishing in my many years of working with traders is the often blatant disregard for this most vital third element of successful trading.
It’s almost as if traders would rather pretend that this doesn’t exist at all and instead would rather just say to me “just show me how to be a winning trader Mohan without the psycho mumbo jumbo”. Some of you may be thinking this right now and indeed you are the ones who need it most.
Often I have seen that it will take a trader two or three blown out trading accounts to finally start waking up and realizing how important the Traders Mindset is in the entire process. The false assumption that a beginning or intermediate trader doesn’t need to train this aspect of their trading life can be the cause of devastating financial destruction. Partially to blame is Wall Street itself and the ridiculous commercials that are often put out on television and the internet designed to convince beginning amateur traders that “trading is a piece of cake”. All you need is their software and to open a brokerage account, practice a little bit and you are on your way to millions. How many times have we heard this type of junk on the brokerage ads?
The worst company in my view who is criminally guilty of this is eTrade. They create and endlessly show ridiculous commercials such as the goofy little baby in a crib trading on his cell phone. This is really insulting to traders and in bad taste considering how the vast majority of traders lose at trading. Just see the psychological implications of these nonsense commercials… “Trading is so easy even a little baby can trade the markets”. What a cheat shot, a very insulting and dangerous way to use to open up new brokerage accounts. eTrade’s most recent commercial shows some clown teenage kid crazily jumping around at a party aboard his new 50 million dollar yacht and the message that “the dumbest kid in high school is getting his revenge on the world” is truly disturbing.
Why aren’t the industry regulators that so vehemently scrutinize the smaller brokerages doing something to stop this ridiculous propaganda? I’ll leave that for someone else to figure out.
Your brain does not like what trading does to it
The brain does not like what trading does to it. It does not like to experience the fear of unknown and the nervousness of perceived unlimited risk that can occur while trading and putting trades on.
When confronted with these things the normal reaction of the brain is a “fight or flight” response. This is what practically all new traders that I have worked with experience. The reaction in the live markets is seen by jumping out of winning trades too quickly or worst of all holding losing trades too long hoping for a reversal of the loss. Multiply this by hundreds of trades with losses and you have a formula for trading psychosis if not treated quickly and professionally could result in devastating losses.
I know that you work hard with the other two key elements of trading but why not with your brain which is the most important factor in trading?
All professional athletes have personal trainers that coach them in their goals, focus and on how to improve their game. Usually this is trained in incremental, consistent improvements. Over time such incremental gains can often become substantial victories. This is exactly the same in trading but we have to get over this idea that “I don’t need mental training to trade the markets….just a good system. Just show me that”. I cannot tell you how many times I have heard that from traders over the years.
Well, in truth if you have been in the trading industry a while odds are you are getting bombarded with trading ideas, charts, indicators, systems and much more. And along with that many advertisements with false, unproven claims of how to become a successful trader sent by so called trading advisors who don’t even trade themselves.
How is that all working out for you?
A relatively simple solution
Although there is much to learn in this field of developing a Traders Mindset, the simple goal is to train the brain to think in terms of “Probabilities” as opposed to its normal fear reaction to “Unlimited Risk”.
Learning and applying this over time gives the brain a chance to experience something a bit more comfortable and adaptable. This is vital because if you do not change this one aspect of your trading mindset the brain will keep sabotaging your efforts in most cases.
You will want to start thinking in terms of your trading as an “odds game” similar to gambling. The real key to this is indeed having a proven, winning, consistent trading system that you have trained yourself to follow diligently while live in the market action.
If that system has for example a proven 70% win/loss ratio then you know that out of ten trades seven will most likely be winners and just 3 losers. As you train your brain to experience this excellent probability of having overall winning trades you will find it relaxing a bit more away from the fear potential of unlimited risk.
I am not saying this will necessarily be easy to do especially if you have been trading for a while and have been ignoring developing a genuine traders mindset. But by studying this article and the works of the experts referenced here you should be on the right path.
Moving from fear to strength
Take a look at the above picture. What do you see? Are you the kitten or the Lion? Or somewhere in between?
Using this picture as a metaphor you can view this as a measure of your development as a trader and the Traders Mindset you are working with. So be sure to save it for future viewing to check your progress.
In trading you want to gradually move in progressive stages from fear to strength. As mentioned earlier you want to attain gradual, incremental improvements in executing your method with the right attitude and Traders Mindset.
The nervous element of trading is never going to go away
As previously discussed, I have been day trading for about 30 years which over that time turns out to be literally thousands of trades. Still, to this day every single time I click on my trading platform and enter a trade I still feel a bit nervous. That is normal and natural for anyone taking on risk.
A famous actor once said something like, “when I cease to feel nervous before going on stage that is the time I should get out of the business”. Similarly in day trading there is always going to be an element of excitement and nervousness. But ideally applying what you will learn from this article and the resources I cite here it will make the effort easier and more rewarding for you.
So the first step is accepting that with trading there will always be this discomfort. It is part of the business and you probably will never get rid of it entirely.
Trading affirmations to the rescue
Learning to use and apply “Trading Affirmations” can be an important first step on the road to training your brain to be less nervous when trading but also to learn to love trading more each day.
Here are a few excellent trading affirmations to start with. Try copying these and putting them on your trading desk to read each day for a week before trading to see what happens. Chances are you will never want to stop once you start.
- Things change in the market every day and so I am willing to change too in order to harmonize with the market.
- I believe and think in terms of probabilities and I know that by taking every trade that qualifies according to my trading rules the statistics are on my side.
- I have discipline, patience, no fear of loss, belief in probabilities. I trade the market… not the money. I am a trading machine. I am calm, focused, confident and highly disciplined.
- I wait for 100% rule based trades that meet my trading criteria
- Money will follow my mind set, what is my mind set right now?
Again, just try using just these affirmations for a few days by saying them before you start your trading day. They will lend clarity to your efforts and inspiration to make trading a bit easier ideally.
I have produced a small library of Trading Affirmations on my Day Traders Action website located at: https://www.daytradersaction.com/working-with-trading-affirmations/
I hope you will study these and make progress in developing your vitally important Traders Mindset.
Working with excellent Trading Mindset Coaches
Back in 2004 I did a live seminar in Boca Raton, Florida where we had over 300 traders arrive at the Marriot Hotel on the beach to learn my trading methods. Out of that group there were over a dozen floor traders as well as futures brokers from Chicago as well as a lot of great traders some of whom were very large size traders (50-100 ES lots).
At this webinar we were honored to have the brilliant Mark Douglas join me to give a very exciting presentation on Traders Mindset development. I had met him years before in the late 1980’s in Chicago and took his training. I had also passionately studied his books which are now classics and available today.
Here is a link to a page of quotes from Mark Douglas on trading which I believe you will find quite valuable. Be sure to purchase his books as well especially the last one he wrote called “Trading in the Zone” before his fairly recent passing away. His work is being carried on by his wife Paula.
I also had another widely attended seminar some time ago where we had the wonderful and experienced traders coach Adrienne Toghraie give a presentation. The attendees loved working with her and she has received tremendous respect in the trading industry.
I have found the work of Rande Howell to be valuable and I think you will too.
Just remember that no one can fully understand the Traders Mindset unless they themselves have been trading on a consistent basis over a period of many years. Most of the Trading Mindset coaches do not trade the markets themselves although I know Mark Douglas did. However, I believe the above mentioned references will give you excellent ideas on developing a Trading Mindset as they are experienced in human psychology, neuro linguistic programming and other disciplines that can help traders.
Where to find a proven, highly accurate day trading system
So I hope you found this article valuable in clearly describing the three key elements to success in day trading.
It would only be fair for me to conclude by telling you of some of the milestone accomplishments that I have made in the trading industry in the event you would wish to explore our services.
- Mohan: the first and only trading advisor in the history of the trading industry to produce a daily newsletter that called the exact direction of the markets every day for 16 years in a row with 80% accuracy in his forecasts.
- *The development of Boomerang Day Trader which is the first day trading software in the industry that produces up to 90% winning trades signals guaranteed by my company. We have had this guarantee in place for over 5 years and have not had one single owner of Boomerang challenge the guarantee. This is because Boomerang really works incredibly well.
- Our Day Traders Live trading room just completed its 50th winning trading session in a row trading the volatile mini Nasdaq and Crude Oil futures. This is live in front of a daily trading audience consisting of regular long term subscribers and new traders. In my 30 years in the industry I have never seen or hear of a day trading room having 50 winning days in a row. It is almost mathematically impossible, yet we have done this and will continue to do so.
You can learn more about our services here.
Here is my YouTube channel for the “Day Traders Action live trading room”. On this channel you will see many examples of me taking live day trading scalps, intraday short term trades and larger scale intraday swing trades.
I hope you found my article today valuable and if you have any questions on day trading or the content of this article feel free to email me at: Mohan@daytradersaction.com
Wishing you all the best of success in your trading!