Develop a Winning Trader’s Mindset

We want to discuss how to Develop a Winning Trader’s Mindset – a mindset that will set you on the path to profitability, improvement, and performance.

Knowledge and Experience

What’s important to realize is that it takes time and experience to master these fundamentals, and it will take some time to truly put everything together.

For most traders, it takes at least 2 full market cycles of Bull to Bear Market to achieve consistency and develop the core of their strategies.

This may feel like a lot of time and work, but remember that once you have a complete system that you are confident in and that works for you, you will be able to trade and benefit from it for decades.

The TraderLion Pledge

Are you serious about working hard to trade better, catch leaders, and improve your performance?

If so, we recommend you write out the following pledge to yourself.

We recommend doing this on a piece of paper, there’s a magic in physically writing down a goal.

Make the commitment today to learn the skills necessary to take your trading to the next level. Your future self will thank you.

The Stages of Trading

One of the first steps towards improving in any endeavor is to take an honest look at your current abilities and make a plan towards reaching the next rung.

For trading, we’ve found it helpful with the 1000s of traders that we have worked with, to break it down into 3 Stages (you can also call them phases to not confuse them with Stage Analysis).

To identify your level, read the bullets below each graphic and look at your equity curve. The overall trend and volatility will tell you which group you belong to.

In general, Stage 1 Traders will have an overall declining equity curve, maybe with small uptrends in the best market environments. They have no real system and act very randomly.

Stage 2 Traders have started getting serious about trading and learning. They will make progress in good markets but mostly give it all back when the tides turn.

Stage 3 Traders have an overall upward-trending equity curve. Their wins more than pay for their losses, and they keep the gains for the most part when the market turns against their style.

Here are some common problems that Stage 1 and 2 traders experience. Also, don’t think Stage 3 traders have everything 100% figured out.

They may also experience these and fall back into bad habits. The difference is that they re-correct more quickly, and their baseline level of performance is higher.

If you are not a Stage 3 Trader, it can hurt to admit that you need to work harder. It touches the ego. You may be very competent in another field and feel that you are smart and deserve to have it easy and achieve success right away.

However, trading is a different beast. A lot of natural instincts related to fight or flight work against us, and we have to, in a sense, relearn how to walk.

It is possible for everyone to succeed, but it takes longer than most expect, and the journey is tough on your emotions.

To weather the storm, you have to adopt the mindset of a student. Get a winning trade? Awesome! Look at what you did right and document the steps you took.

If you take a loss? Awesome! Sounds like a great opportunity to identify a weakness in your system and learn a valuable lesson.

When a baseball player gets into a slump and can’t hit, that does not mean they are a bad player overall. What it means is that they need to put in extra work in the batting cage and the film room, identify tweaks to the process they need to make, and regain their confidence through small wins until they are ready again to perform.

Winning athletes embrace failure, they recognize that by overcoming it that experience will make them better, more consistent, more resilient. Failures lead to 1% improvements they can make that will make them a better player.

In trading, it’s the same way. Losing money hurts, drawdowns suck, but you should expect them, prepare for them, and learn from them.

They will make you a better and more successful trader who can perform at a high level over decades. The 1% improvements and sucking less will make huge difference through the magic of compounding over time.

The Evolution of a Profitable Trader

Our goal is to be your guide along this process and speed up your learning curve as much as possible. To help you evolve into a profitable trader

You will have to take the steps along the path towards Stage 3 Trading and success, but hopefully, we can help point you in the right direction and warn you of any false beacons or traps that lay in wait.

Remember that you have to commit to this and develop a winning trader’s mindset – the mindset of a student who embraces any setbacks as learning moments.