The 10 Keys to Winning Mentally

Two of the biggest obstacles in trading are managing risk and developing a winning method. However, even if you control your risk on every trade and have a methodology that is a winner,  you can still be tripped up by your own mind. Even when effectively managing risk, you will probably lose 10% t0 20% of your capital, and possibly more,  in a draw down with a more aggressive system. Under performing can put significant pressure on a trader. This is the reality of trading. So, what does it take to come back after a loss?

On the trading floor of the mind, the bears of  fear, stress, nervousness, and unworthiness battle against the bulls of faith, passion, focus, and confidence.

Your success in trading is directly related to what is going on in your mind. You will know that you have made it to the next level when you are the same person when performing analysis as you are when trading under the pressure of live markets with real money. It is not the time to be pondering risk management, position sizing, and exits and entries while you are entering and exiting trades during market hours. You should be doing nothing but implementing the trading principles of your plan in live trading.

If your losses are weighing heavy on your mind,  you need to lower your position size and risk per trade until you find the level where your emotions disconnect from your losses. You have to find the sweet spot where your wins are big enough to be worth playing, and your losses are small enough to not break you mentally or emotionally.

To win the mental game you must have…

  1. Faith in yourself.
  2. Faith in your system.
  3. An understanding of what trading size you can handle.
  4. An understanding of the level of losses you can deal with mentally and emotionally.
  5. A love and passion for trading.
  6. The belief that it is possible to win in trading.
  7. The belief that all your hard work will be worth it.
  8. The belief that you are a trader, that is what you do.
  9. The perseverance to have your butt kicked over and over but keep coming back.
  10. The stubbornness to keep trying until you are successful.

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My journey through the markets were brutal, and tried me mentally and emotionally.  But I can tell you that you can come out the other side with a prize that was well worth playing for. The markets are not based on luck. You can win by working hard enough at it. If you can win the mental game you will win, because that is the game of trading.