What do you say to yourself when you are considering a trade? do you think of trading to win versus trading not to lose?
Most traders would naturally focus on NOT losing, because that’s what they are trying to avoid. By focusing and concentrating on not losing you are actually engaging more so in a losers mindset. It is better to set up a positive self fulfilling prophecy. So if you are constantly recognising self-talk which engages in conversations like “what if I lose money” or “what if I have a bad day”, you should pay attention to that internal conversation and try to think more positively saying things such as “how can I have a good day” or ” how can I make the most out of the trade and its opportunity”.
I have broken down the characteristics of traders that are trading to win as well as traders which are trading not to lose. A trader needs to consider at all times before and during a trade whether they are thinking in a way that is more engaged in “Trading to Win” or “Trading Not to Lose”. Concentrating on not losing is usually what leads to losing and concentrating on winning is what usually leads to winning. Trading is a business that requires taking Risks and Embracing them, focusing too much on not losing disables a traders ability to take Risk and Accept it. To be successful in trading you must be willing to take Risks, but at the same time know and manage your risk at all times from the perspective of your Goal\Objective and not because you don’t want to realise that cost.
The Characteristics of a trader who is “TRADING NOT TO LOSE”
- RISK AVERSE.
- Focus is on NOT losing (which leads to struggle with gaining!).
- Using tight stops to prevent bigger losses, mainly out of Fear of losing.
- Trailing stops too aggressively in order NOT to lose.
- Snatching at profits, the fear of a certain profit becoming a loss or no profit.
- Holding onto losers, with the inability to accept a loss, even after the reason for being in the trade is over.
- Is Fear driven rather than driven by their Vision or Objective.
- Is driven by past experiences, which cloud the present moment and what is REALLY happening.
- Looking for certainty.
- Looking to satisfy the Ego rather than the business.
- Trading to satisfy the P&L.
- Lacks patience to wait for the right trade, and trades to satisfy the need to trade rather than to win with the objective in mind.
- Lacks patience for winners to play out or offside trades to work out, for the fear of losing or giving back gains.
The Characteristics of a trader who is “TRADING TO WIN”
- EMBRACES RISKS
- Focus is on Winning.
- They have a clearly defined GOAL\OBJECTIVE.
- Trades in the GAP between where they are now and where they want to be.
- Trades in the Moment.
- Committed to the VISION of achieving a goal.
- Will embrace uncertainty.
- Will embrace market noise, as long as the reason for being in a trade is still valid.
- Will have belief and confidence in what he is doing.
- Will have Patience for the market to play it self-out and wait for the right opportunity to set-up.
- Will have the patience and belief\confidence for a trade to reach its targets and manage the trade accordingly.
- Trades to trade well!
Great piece, always true and very pertinent coming into this quiet time. Thanks for putting it together. Whilst obvious, never obvious enough especially in hindsight. Will be printing it off and pinning it up. Thanks Jason.
As always clear,and on the main essence.
it would be great to get how and what steps do i need in order to switch from A to B.
thanks
Uri
Hi Uri,
Sometimes the simple things work best to start shifting the mindset in the right direction. Here are few suggestions:
1. Clearly define your Risk per day, so you know what you are willing to Risk (lose) if things don’t go well. Embrace Risk and Love it because its all a part of the game!
2. Clearly define your Goal\Objective for the day. Generally 1-2% of account per day as a goal is good for a day trader. Matching the risk with objective is a good idea, or aiming higher than what you plan to risk.
3. Never take more risk than you can afford with your account. I usually recommend traders risk no more than 1-2% of their account for any give day. If you hit the risk limit then you stop trading, otherwise you must stay Fully Engaged and Focused in reaching your Objective\Goal for the day.and consciously trying the trade to trade well, following the plan to the best of your ability.
4. Visualise you day and how you plan to trade before the market opens, and with each opportunity Visualise in you minds eye what you want to see if you are right with your trade idea.
5. Also know what you don’t want to see in advance so that you can get out if it doesn’t look good.
6. Understand that the market is Uncertain at all times, there is No certainty, so never look for it.EMBRACE Uncertainty.
7. Fully accept that every trading opportunity is just an idea, it can just as easily be right or wrong. if it looks right work the trade the best you can, if it looks wrong cut your losses. An old adage but very important to practice, and not just know.
8. Continuously build Belief and Confidence in your plan, and the concepts\ideas that you trade. I fully believe in Auction Market Theory principals and the power of Volume Profiling, as well asthe use of order flow. That’s what helps me trade well with the tools. If you don’t believe in the way that you trade then its difficult to make money.
I’ve course there is much more that can be done, but these are just a few of things that I practice daily to keep me on top of my game.
Kamd Dhadwar – Owner L2ST
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