If you’ve traded for longer than a month, you’ve most likely had one of these 7 thoughts invade your mind. The goal is to catch yourself thinking about them and make more rational decisions.
Let’s get into them:
“I want to flip my account today”
Is flipping your account written in your trading strategy? If not, run away from that thought immediately. Flipping, tripling, or quadrupling is a strategy that gives brokers generational wealth. The keys to trading have always been strategy, psychology, and sound risk management.
The account-flipping mentality goes against successful trading principles. In fact, account flipping is borderline high-stakes gambling. Know the difference between trading and gambling.
Trading on a chart doesn’t always mean you’re trading.
“Let me put it all on one trade”
In due time, you’re bound to lose a trade. Even if the perfect strategy exists, an extraordinary market event will create an anomaly in that strategy. There’s never been a successful trader who practised putting everything into one trade. So, why should you?
The “put it all on one trade” thought is actually a symptom of something else — a small bankroll. Every trader has a different perception of big and small stakes. If you find that 20% of your trade size is too small, you likely need a bigger account.
“Hmmm, I can cheat the market”
In life, we can cheat and get away with situations, whether a test, a job, a competition, etc. People are so used to cheating things, it’s their instinct to try and cheat the trading markets. But here’s the issue:
The charts look and make you feel like you can cheat them when in reality, it’s one of the hardest things to cheat on planet earth.
Have you heard of the 10-80-10 rule to ethics? It means that 10% are ethical all the time, 10% are unethical no matter what, and 80% could behave unethically based on the situation.
When you apply this to trading, 90% are approaching the market looking to cheat it — how coincidental is it that 90% of traders lose money in the market?
“Let me take out credit to fund my trading account”
There’s a reason you can’t ask the bank for a loan to buy stock in their own company, but they’d happily give you a loan for a house. Why? Trading is risky. If you don’t have a foolproof plan B in case trading with credit goes wrong, you’re screwed.
Trading with mental advantages is nearly as important as having a strategy.
Mental advantages can simply be having clarity in your mind or knowing that you’ll still be okay if you lose everything.
Trading with credit puts your mind at a deficit. Avoid it at all costs.
“Let me leave this trade on while I sleep”
If you’ve ever had this thought, you probably don’t have a clear strategy with take profits and stop losses. I understand that everyone has a different style of trading, but this thought will eventually build up emotional stress to the point you eventually make an irrational decision.
Just like taking credit to trade, leaving a trade on as you sleep puts you at a deficit. You’ll constantly be worrying if it will win or lose.
“The price is going up, I’m going to long now”
Again, the fear of missing out is another tool making brokers and exchanges rich. It’s human nature to run when we see people fleeing from a place. But in trading, this can lead you to a liquidity exit trap. In other words, you buy the top and give other traders liquidity to cash out their funds.
The best way to defeat this impulse is by having an abundance mentality. Knowing that there’ll always be more opportunities and setups to act on prevents you from reacting to external impulses.
“I need to make back what I lost”
Defeat this thought or feeling by accepting that trades are independent of each other. Your previous trade has nothing to do with the trade you’re about to make. So, if you trade with a 1:1 profit/loss ratio of 50 pips, you hurt your strategy if you set your ratio to 2:1 because you lost the previous trade.
Remember, trading is about going through a series of trades. Not just one.
Detach yourself from the trades you do. The more emotion you pour in, the more personal you make it, and now, the harder it is to accept moving on.
Good traders don’t personalise trades.
Last Thoughts…
Before you battle the markets, you must first defeat yourself.
The thoughts and impulses that forcefully invade your mind are counter-productive to you becoming a successful trader.
Use the knowledge in this post as mental aikido to make better decisions.
If you appreciate the knowledge we give in the post, join our waitlist below to become part of the TradrLab nation — you’ll receive trading knowledge, insights, and guidance. Plus, be one of the first to be notified about our game-changing trading app.