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Trading on Emotion. How to create the ultimate mindset

We have all been there before. Starting out in our trading career with zero experience yet the mindset to strike it rich day trading. We hit a few winners and it’s like Oh wow, here we go! And Bam! That first loss. It hits you like a ton of bricks. What’s the first thing we tend to do? We try to quickly recoup those losses and completely forget about our strategy and most importantly discipline. Then it turns into one loss after another and drains us mentally to the point we walk away and question whether trading is really for us.

My advice comes in two forms. The bad news and the good news. No matter how much advice you get, human emotion is very strong and we learn by making mistakes. I’ve made plenty and after blowing two accounts, I had to take a step back and figure out what was happening. Long story short, it was my strategy, my mindset and not controlling my mindset.

Let’s go over the first part. Strategy. This is where you put together a game plan for your career. Yes, you heard that right. Your career. We aren’t looking for a few trades here and there and boom! A million bucks. This is a career and a full-time gig. Focus on which investment vehicle you want to trade and figure out a strategy to tackle it. Paper trade until you perfect that strategy and apply it once the odds are heavily in your favor. There are many types of trading vehicles. Stocks, options, futures, etc. Pick one and master it. Trading too many will not only negatively impact your results, It will confuse you and it’s unnecessary. Do one thing right and eventually, mastery will follow.

The second part is your mindset. Probably one of toughest things to master. It seems simple in theory. However, consistency is the issue. Anyone can be gung ho and say I’m so motivated and ready to go! But how long does that last really? Again we go back to consistency. I’ll tell you how I did it. I took 6 months off trading and started to work on my strategy more and also did a few things every day to get myself pumped up and did this every day until today. Write down your goals first off. Sure long term is great yet the key is to break them down to daily, weekly and monthly goals. This gives you a to-do list and helps you do small tasks that ultimately reach your ultimate goal. Secondly, I used affirmations and white board to write down positive affirmations. That board was on the wall above my monitors so I could see them every day and tell myself that I can be the best trader. Some people laugh at it but honestly what you tell yourself is ultimately what will happen. The subconscious mind is so powerful and little do we know that one simple switch in our thinking can change our whole life around. The third part of changing my mindset was watching motivational videos. Every day before trading I watch videos on YouTube on motivation and inspiration. They vary from a few minutes to 10 minutes. It’s such a rush and gets you so hyped it’s incredible! Even after years and years of watching these videos I still get a rush.

Now last but not least. Emotion! How do we keep ourselves sane in this crazy world of day trading? Simple. Stay disciplined. I’ve mentioned this time and time again. Don’t go for home runs and try and catch that next big move. Take your small profits and take them consistently. Over time you will develop better trading habits and you won’t be bogged down with a few wins here and a few losses there. It will feel like a rollercoaster that way and stress you out to the point of wanting to quit. Once you have a sound strategy in place as well as a sound mindset then the emotional part will be in check. You will be razor sharp and focused. It will come naturally and you will treat it like a game that you always win.

Keep in mind these 3 keys to creating the ultimate trading mindset and the profits will follow. Build that consistency and keep it going. Nothing else will matter. In the end being focused on the end goal is the target. Train your mind to think this way and everything else will come to fruition.

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