Profitable Trader Mindset
Welcome back for a great discussion on a critical component to any trader's success or failure. It is their mindset and the best keys to sustained profitability! This is truly the crux of real growth and sustainability to get to that place in your trading that you are consistently profitable. Your mindset. For anyone who has really attempted trading as a means of financial gains, you know what a big deal this is. Really, any pursuit of a challenging life endeavor! A strong, stable, consistent mindset is so powerful. And conversely, a negative, insecure, fearful, hesitant mindset will be your downfall. As we have progressed in our trading journeys, we have worked daily on cultivating our most stable and supportive mindset for our journeys and we can feel the improvements that this work brings to our outcomes! So, let’s get deeper into all the angles of the most optimal mind for a profitable trader!
There’s certainly been levels to this and it continues to be a work in progress, but one we prioritize because we know our skill set will only serve us up to what our mindset allows. To us, a profitable trader mindset focuses on the process because you can’t have progress without a process. This also makes me think of another Eddie Pinero golden nugget “simplicity is the greatest form of sophistication.” We know when we do this with our discipline, risk management, adaptability, and continued dedication to learning, we are indeed cultivating the mindset of a profitable trader. We strive to make choices with every trade that are intentional, purposeful, and driven by our established system. Kendra was asked about a year in her trading journey by a former instructor to define the top quality of a successful trader. She went back and found that statement and still believes in her answer, but she also can say almost two years later, the sentiment: “easier said than done” is an understatement! Here it is: The top quality of a successful trader is the ability to consistently operate under a specific set of standards and parameters that have been defined as their own process. This trader understands his or her process was created by having the discipline of correction and the result is trader confidence. There cannot be confidence without consistency and there cannot be consistency without discipline.
Roman Emperor Marcus Aurelius has a quote on this that has truly withstood the test of time: “You have power over your mind - not outside events. Realize this, and you will find strength.” This is majorly applicable to your consistency with trading. Any trader will know exactly what it feels like to enter a trade and immediately feel the flutter of nerves - when you know you just put your accounts and capital on the line, you entered into risk in an attempt to be rewarded. Here, you could let the fear, anxiety, and second guessing take over and make rash management choices. Or, you could own your thoughts and choices and stay calm, neutral, curious, aware of your bodily sensations and focused on the data and price action. We do have the ability to maintain this control over our mind’s focus. This is the most crucial time to exercise your authority over your thoughts and subsequent actions. If your trade is holding, don’t get scared out of it. If price action is going against you, remember your protective stop keeps you in the game and is not optional, so you can not move it. Either scenario - breath, focus, remain aware of your body and actively choose to manage your mindset in the way that you ideally would without any pressure of being in a live trade - as if it was only a mental trade. If you have a true edge and skill as a trader, trade your setups! You must face and accept a modicum of fear in order to reap the benefits of the profits. But to do that, you must carefully and adequately prepare for each trade, and then hold to your plan once you enter it. It can be done! But, it will take time to build stamina and stability with this restraint, trust and discipline!
John Assaraf has said: “Mindset is what separates the best from the rest.” Yes! Trading makes you uncomfortable. What you then do with that discomfort will set you apart for greatness or put you back in a safe and secure but limited pool of possibilities. In our experience, a strong mindset is crucial in trading because it helps us stay neutral after each execution, respect Ms. Market and her abundance, and maintain a winning attitude. This grants us the endurance to maintain confidence during temporary drawdowns and keeps us creative and curious in the forever changing market conditions.
We watched the interview in 2023 of Lance Breitstein with the Humbled Trader and there were so many great points within that discussion. So, shout out to the amazing female trading boss, Humbled Trader, and the impressive and gracious Lance B. From that interview, some of their great points are applicable to this discussion on a profitable and consistent mindset! For example, some questions to appropriately gauge your progress that are healthy and beneficial for growth include: are you doing better than yesterday, how has your trading changed compared to last month, have you improved on the things you were working on, what’s the next best thing that you should start working on now? Lance had a killer point that to just keep improving, you need to pay attention to your actions and know what parts of your game you need to be working on. There’s no reason to waste a single day if you are serious about this pursuit - study yourself, your trades, your emotions, your mindset. Identify weaknesses and target them with a defined process for improvement. Can you work on getting better entries? Can you try to hold a trade just a little longer than you did yesterday? Focus on getting 1% better without any blowups and that is how real progress is made. Nothing this dynamic will evolve overnight. But there are daily choices you can work on to target your shortcomings and make substantial progress. And mindset is at the core of so much of this!
One great point from Lance about not making it about your P/L was particularly powerful. Becoming a successful trader is a hard learning curve, so trade intentionally every day. Focus inward and judge yourself on what you intended to improve upon, reflect on your actions and come up with solutions that speak to you and your situation. If you can outwork and out compete everyone else who is succumbing to the difficulties as they arise, that is how you truly get somewhere! Dial in your trading system and aim for the 10 best trades - it’s better to hit 10 balls purposefully, than swing at 100. That is intentional trading. We loved this so much, the focus that we each need to just try to be the best at our own game and in our own lane. That’s where we are at. We are not trying to compare our journeys to anyone else's. But rather, fully embrace this challenge and want the work of it - the studying ourselves, seeing where we need to improve, leveling up our system and allowing the time to see the benefits come. This is the refinement process, and the best success stories take time!
“If your goal is to trade like a professional and be a consistent winner, then you must start from the premise that the solutions are in your mind and not in the market.”
~ Mark Douglas, Trading in the Zone
For us, a huge factor in our mindset on a given day is our ability to stay present in the moment. Psychologist Abraham Maslow expressed this well with: “The ability to be in the present moment is a major component of mental wellness.” If we can stop the chatter in our minds and just focus, things become so much more clear. We trade so much better if we are alert, patient, open and curious to what our data is revealing. Present with what Ms. Market is hinting at and able to see if we have a strong trade setup coming. This awareness of our attention really helps us be the master of our mindset while we are at our charts. We are not robots, there will be times in a day when our minds wander, when we allow ourselves to dream, plan, organize, etc. But, we need to remain cognizant of where our minds are at specifically when we are conducting our business as a traders. This purposeful attention to and control over mindfulness is the most optimal priority for effectively executing our best trades.
A major factor in becoming a successful, consistently profitable trader is keeping it about the trades and understanding and dissecting how and why you’re executing how you are on any given day. The results and money are just a byproduct. One good trade, followed by one good trade. The money is secondary. By having a clear business plan / a strong trading system, you will be in a solid position to shoot your shot. If you trade well, and execute according to your trade plan, you will win more than you lose, your losses will be contained due to your planned risk management, and the profits will be able to compound. In your mind, you need to know this is true and focus on these facts while respecting the natural variance and game of probabilities. Entering the market each day with a desire to get a certain amount of points for your day can set you up for disappointment and disenchantment which can lead to trading in your feelings to prove something. However, direct your mindset prior to your trading session to not focus on the money you want to make in a day, but rather, aim for beautiful trades based on your edge that you intended to execute with a size appropriate to your account. This is how patience pays you!
Traits such as discipline, patience, and adaptability are crucial to being a profitable trader. Lasting success in trading stems from a combination of skills including respected risk management, steady emotional control, creating and utilizing a well-defined strategy and continually reassessing, back-testing and learning from both your successes and failures. If we can set realistic expectations and focus on the data rather than succumbing to the emotions, then the wins will outweigh the losses and the money will follow. Keeping this approach as the dominant force and energy in my mindset every time we are at our charts - that is how we are becoming profitable and growing our financial freedom. Have we achieved our goals yet? For sure not, in fact, we really feel like we are still in the very early stages of all that we will build. We have identified the areas we need to work on most immediately and we show up for ourselves every day to work at them. And, to be honest, our end goals are really not an end - they’re an ever moving target and we intend to continue to foster a growth mindset and never stop pushing our limits! In fact, a growth mindset is actually an important, key component of the consistently profitable trader mindset for sure. Always remain a humble student of the game to combat overconfidence and stay current with an evolving world and market!
So then, we know what our profitable trader mindset needs to look like, prioritize, and where we need to set our intentions. What about the how? How to cultivate this mindset. If you haven’t already, we really believe in all the powerful habits we put in our essential premarket episode a couple weeks ago and so many of those are directly applicable to the work of owning and managing our mindsets for our entire trading session as well! Behaviors such as daily affirmations, journaling, learning from other excellent content creators, meditation and visualizations, exercise, thorough chart preparations… These actions give us the most ideal environment to conduct our business and are the same choices that will feed our minds. Daily practice and determination to get 1% better can and will get us to the top 1%, but having that faith and trust in oneself takes damn near 100% of our mental capital. But why not? We are worthy of that investment and our future selves are counting on us staying strong in this game. And so far, our survival rate is 100%! The late and beloved KOBE BRYANT RIP said it best “If you see me in a fight with a bear, pray for the bear. We don’t quit. We don’t cower. We don’t run. We endure and conquer.” Yassss, Mamba mentality right there and eternally.
This discussion is central to how we behave as traders in our minds and our actions that are driving us to our profitability. And we have big goals to get to, so lets goooo!