For more than 10 years I have had thousands of ‘wannabe’ traders come along to listen to trading methodology demonstrations, with the great majority saying: “Just give me a trading system that is good enough for me to make money—I have no problem with the psychological side of things.”
Wrong, wrong, wrong! The psychology, that is, the approach I am outlining to you, is what it’s all about. With the right mindset you can make money with any system with an edge. However, the edge on it’s own will not guarantee success.
They are working on the incorrect premise that their current way of thinking is at the level required to make a “right” decision and that their mindset is okay for trading, when in fact, they don’t know what they don’t know and indeed don’t know enough to make that call. The degree to which people deny or belittle the importance of psychology in trading is the same degree to how much more effort they need to put into developing and improving their trading mindset to achieve trading success.
I have found amazingly that:
• the more successful a trader is, the more effort he/she continues to put into improving his/her trading mindset.
• the less successful a trader is, the more effort he/she puts into analysis or searching for tips, believing that the answer to success lies in cracking the right set of indicators and settings or right tipster.
In fact, the inner game of the trading process is
• making your focus that of acquiring the skills of consistency and objectivity.
• having an image in your mind of trading as an ongoing journey of acquiring these skills and improving these skills.
• accepting that your trading focus is not profits. Making profits is a by-product of this skills acquisition process. You may have heard other traders say, “detach yourself from the money”. Let’s put it another way. Detach yourself from the result or outcome of each trade. You achieve detachment by focusing on the process and how well you execute the process.
• enjoying the process of gaining and improving the skills of consistency and objectivity. Enjoy the challenge of this process and you will enjoy trading.
Don’t focus on the outcome, focus on and execute the process. The degree to which you focus on outcomes will be the degree to which you will be unsuccessful in the market. This is a trading paradox we’ll investigate further in next week’s blog.