BarroMetrics Views: A Winning Mindset
It’s been an interesting period for the market:
The S&P appears to be on the cusp of resolving its choppy price action that has been with us since Feb 2011. And because the markets I trade are either directly or inversely correlated with US Stocks, they too have been choppy to a greater or lesser extent. This meant that my day trading has been proving more profitable than my position trades. Only problem is I have a mental hurdle to overcome for me to day trade. I much rather put on a position and let me work for me. It also has meant that I have had to exit a series of positions usually with a small loss.
And that brings me to today’s blog. I was having a chat with a friend of mine, John, who asked me: “What is the main difference between a long-term profitable trader and the unprofitable one?”.
I said: “Risk Management”; he replied that while he thought risk management was essential to success, he did not think it to be the main difference. In his view the unprofitable trader traded with a predominant mindset of ‘wanting to look good’ while a profitable trader tended to have a predominant mindset of ‘wanting to make money’.
Now I understand the latter idea but ‘looking good’?
John explained: : The loser wants to appear to be a good trader. That is what is important to him and this usually means having to rack up win after win and never appearing to take any loss (or at most very few losses). His audience is irrelevant - it can be his partner, his broker, his friends, himself - anyone. It’s the image that is key.
The winner wants to make money because money means ‘xyz’ to him e.g. making money means financial freedom etc. If in the process of achieving his goal, it means taking acceptable losses until he transcends his ‘ebb stage’, then he accepts and moves past the losses.
John admits that it’s not that clear cut. Within each of us there is a desire to ‘look good’ and ‘to make money’. But, John added the main difference between the two was this difference in mindset. It explained why losers can make a series of winning trades and let one trade destroy not only the profits but the whole account.
I don’t know….if John is correct.
Sure, when I was struggling to make it, I can think of many times that John’s words proved prophetic. Those who have heard my ‘gold’ story will see how true that statement is. But can it really be that simple? It is really only a matter of remembering why we take a trade each time we take a trade that makes all the difference?
I don’t know…..What do you think?
Refer this blog post to a friend or colleague…
