The Trader Within - Traders Log

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By Bennett McDowell

None of us are born successful traders. Instead we had to find and develop the trader within in us. One of the key ingredients to developing our trader within is to understand ourselves, know our strengths and weaknesses, and apply this knowledge in the market place to produce profits.

Trading System Mentality

Many traders believe that profitable trading is just a matter of having a trading system. This trading system mentality falls short of what is really needed to be successful. A quality trading approach combined with risk control and money management is essential, but the real factor in determining your success will come from developing the trader within. The trader within is a culmination of your beliefs, personality, attitude or mindset, character, and health. You cannot buy these at the trading store! Instead you must identify and know yourself, and then if needed make adjustments.

Align Your Beliefs With Your Trading

First you must find or develop a trading system that matches your personality and style of trading. Many traders fail because they choose a trading system that is not in alignment with their belief system. For example, chances are if you’re a loner and don’t like crowds, then you will not be a good trend trader where you would be required to follow the crowd of traders to make money by being with this crowd in the trend. Know yourself well enough to know what your beliefs are so you can trade in accordance with them.

Practice To Compete Against Champion Traders

You must hone yourself into a trader through education, trading, and then more trading. You must practice or “Paper Trade” until you develop a profitable trading approach. It may take years to develop both the “science” of trading which represents your trading skills, and the “art” of trading which represents your judgment and mindset. Most new traders fail here because they do not have the discipline to work on their trading approach until it is profitable. If you think about playing golf or tennis, you would not compete for money until you became a good player. And you do not become a good player until you have practiced for years. The same is true for trading! Think how foolish it would be for you to go play against champion golfers or tennis players if you where just a beginner. Yet, this is exactly what many new traders attempt to do. Every time you actively trade the financial markets, you are competing against other traders, some of which are champions. Therefore, you must acknowledge that all markets are championship arenas and you are competing against the best traders in any financial market you choose to trade. Think of how foolish it would be for a novice trader to enter a market and expect a positive outcome competing against traders that are champions. This is why new traders need to practice until their skills are developed enough to be able to successfully compete.

Balance, Yet Focused

Another important part of the trader’s mindset is to incorporate balance into your life and into your trading. While it is important to be a focused trader and also one that is focused in pursuit of proficiency, there is a line in which focus can become obsession. Do not cross this line! If you find you are becoming obsessed with your trading, then it is time to pull back and take some time off. Relax regularly to avoid becoming obsessed with trading. If you are not balanced, work on being balanced. Make yourself devote time to your relationships outside of trading. Go to the gym to improve your health. Do activities that you enjoy besides trading. And don’t forget to relax. A well balanced skilled trader will win more than an obsessed skilled trader nearly all the time because their bodies are more relaxed, less anxious, and less susceptible to negative emotions such as fear and greed which cause poor trading.

Practice Trading As A Game, But Trade To Win

When you are developing your trading skills and trading mindset have fun at it, and treat it like a game. Develop a stress free environment where practicing and learning are fun. This is where “Paper Trading” can help you. “Paper Trading” is a great way to practice your trading in a stress free environment where you can have fun while learning and improving. When you ready to trade with real money, trade to win! Be relaxed yet focused. Don’t get too serious or you will lose your edge and become uptight and stressed. Instead flow with the markets but make no mistake about it, you are there to win! The Navy Seals have a great saying, “It Pays To Be A Winner!”, and “Second Place Is First Loser!”, and this is true for trading as well.