Trading is one of the most rewarding — and challenging — careers in the world!
In a recent study, researchers discovered that profitable day traders make up a tiny portion of the professionals in our industry, less than 2% of all traders in a given year. For those who struggle to turn a profit, day trading can quickly lose its appeal: approx. 40% of all traders quit within the first month, and after three years, only 13% of those who entered the field continue to work ion the stock market.
But for those who succeed, trading can provide the personal, professional, and financial opportunities that other career paths lack.
As their peers give up on the dreams that they had for their future, the best traders take consistent, repetitive steps to achieve their goals. In other words, they know how to form habits that will produce successful outcomes in the long-run.
And every long-term habit starts with a short-term choice.
Like many people who pursue a career in the market, you may be searching for ways to become a more effective trader. There aren’t any short cuts to success in this field, but there are are plenty of steps that you can take to set yourself up for a long and lucrative trading career. Here are five choices that you can make today to become a more effective trader:
1. Work On Your Mindset
Is trading all about mindset and psychology? It sure can feel like it sometimes. When you see a great setup and you don’t take it, fear and doubt are the cause. If you are in a profitable trade but cut it too early, the fear of giving back causes such bad behavior. When you are in a losing position and don’t want to close the loss, fear of losing and greed are the causes. When you take too much risk, wrong expectations and greed drive your behavior. And the list goes on…
The best thing that you can do to become a more effective trader is to work on your trading mindset; with the right training, you can master your emotions instead of letting your emotions master you.
You can get started by reading popular books about trading psychology, such as Trading In The Zone by Mark Douglas, Sway: The Irresistible Pull Of Irrational Behavior by Ori and Rom Brafman, and The Art Of Thinking Clearly by Rolf Dobelli.
2. Learn Something New
There are other things that you can study to become a more effective trader, like strategy development, market trends, and analysis techniques. Enroll in a professional course, webinar, or open-source training program that will help you learn new technical skills; in a few short weeks, you will have the tools that you need to improve your performance and increase your profits.
Going back to the beginner mindset can open your perspective for new things and it will also remind you how it is to truly learn a new skill.
3. Invest Into Yourself
You need to put yourself first. This may sound selfish at first, but every great person follows this principle.
If you cannot take care of yourself, you won’t be able to help the people around you and make an impact. If you are broke, you cannot support your family or donate money to causes that are important to you. If you are not healthy, you will be a burden to others. If you are not happy with your situation, you will drag people down with you.
Therefore, you must put yourself first.
Buy good food, get a gym membership or even a personal trainer, invest into books, go to seminars, get personal coaching, and treat yourself like a person you truly care for.
4. Rethink Your Trading Strategy
At the same time, we know that there are plenty of traders who are committed to developing effective habits. If you have been taking consistent, repetitive steps to accomplish your goals without seeing any results, you may need to rethink your trading strategy.
Analyze your trading and your behavior objective yourself:
- What works best for me?
- When do I lose the most amount of money?
- Which mistake(s) do I repeat all the time?
- What is the ONE thing I need to change that would have the biggest impact on my performance?
- Are my losses my fault (breaking rules etc) or am I doing everything correctly?
And really take the time to answer those questions thoroughly. Go through your last 50 trades one by one and take notes. You will be surprised how obvious it will become what you will have to do to turn your trading around.
During our mental edge course, we have prepared many such lessons and assignments for you.
5. Reconnect With Your Social Network
Most traders underestimate the role that their family and friends can play in their professional lives. Studies have shown that people with close social relationships can improve their workplace performance, increase job satisfaction, and see a positive impact on their ability to focus.If you are feeling discouraged, this is the perfect time for you to reconnect with the people who care about you. It doesn’t matter whether you spend a night out with your friends or take 15 minutes to talk to a loved one on the phone: when you have positive social interactions on a regular basis, you will improve your ability to trade.
Bonus: Long Game Mindset
I am a true believer that anyone can become a profitable trader if he/she manages their expectations the right way. Many traders fail because they believe they can have a millionaire lifestyle within the next 12 or 18 months.
Obviously, two things will then happen if you approach trading with such unrealistic expectations:
- You will take way too much risk to realize the crazy return goals
- You will get discouraged once you realize that you won’t make it
This easily ends in a vicious cycle and I have seen hundreds of traders go through those phases, before giving up eventually.
Instead of having a 12-month plan, adopt a 5 year plan. 5 years may sound like a long time but in the bigger picture, it’s not. If you give yourself 5 years, you will approach trading completely differently. You will be calmer, not stress out every week, you will be able to give it the seriousness it deserves, you will focus on slow and steady improvements instead of hunting for shortcuts, and you will build a solid foundation.
The alternative is that you keep chasing your own tail because you try to double your account every few months. Obviously, this is not how trading works and the sooner you can move away from the short term mindset, the sooner you will be able to take the right path.
Most traders say they want to trade for a living for the next 30 years,
but then act and trade like they have to retire next week.
Are You Ready To Get Started?
What changes are you going to make to become a more effective trader?
Share your thoughts in the comments below!