The first step to profitable trading is the right mindset and psychology. The right attitude and mental discipline doesn’t guarantee that you will be a profitable and successful trader but the wrong mindset almost guarantees certain failure. 

Here are the first ten steps that will take you in the right direction to the correct trader psychology that increases your probability of success. 

  1. You have to be able to filter all the information available to you and focus in on creating your own system that fits your own risk tolerance and return goals. 
  2. You have to accept that price action can seem random at times so you have to trade a system that can filter out the volatility and false moves and trade the big picture and go with the path of least resistance. 
  3. You have to go into trading with a realistic expectation of what your equity curve will look like. All real trading systems and traders have losing streaks and draw downs in capital as the market dynamics change from trending to range bound and from volatile to tight trading ranges. 
  4. Stop looking for other’s tips and trades and develop your own system. You usually don’t know other’s stop losses, position size, and time frame so it is difficult to follow some one else’s trades. 
  5. You must accept the uncertainty in any single trades outcome and focus on the probability of the edge playing out for your system over the long term. 
  6. You must accept the risk of loss on every trade entry and be sure the potential reward is worth that risk of loss. 
  7. You must balance the ability to let your winners run for large wins but also have an exit strategy to lock in profits while they are still there. 
  8. You have to stay flexible with every trade and be ready to exit if it is proven wrong no matter how strong your opinion or how much you believe in your own prediction. 
  9. If you have a valid entry signal in your trading system you must take it. You can’t afford to miss a big win but you can afford to take a small loss. 
  10. Always focus on your positive trades, your discipline, and the potential opportunities in the markets. You can only trade long term if you keep a positive attitude to help you manage your stress levels. 

By Steve Burns

After a lifelong fascination with financial markets, Steve began investing in 1993 and trading his accounts in 1995. It was love at first trade. After more than 30 successful years in the markets, Steve now dedicates his time to helping traders improve their psychology and profitability. New Trader U offers an extensive blog resource with more than 4,000 original articles, online courses, and best-selling books covering various topics.