When Day Trading Finally Made Sense (Mindset, Psychology & Motivation)

Today I’m helping you with your trading mindset. Your mindset is made up of all the established beliefs and attitudes you default to, internally, when it comes to trading.  And speaking from experience, a change in mindset is one of the hardest things to achieve. But when you do it, trading will become a lot easier. It’s going to be interesting.

So, like, subscribe, and stick around for the full video. Trading is more about people than prices Trading is as much about game theory than any underlying economics. You don’t make money by predicting performance, you make money by predicting how people respond to changes in a particular market. There’s a common saying: the market has memory. Well, I would say the market participants, the crowd, have memory.

Optimism and pessimism, hope and fear—all these emotions can exist in one trader at different times or in multiple traders or groups at the same time. The market psychology is steering market trends and price action. Reading market trends and market psychology can be extremely hard for a beginner.

But it can be done if you analyze volume and the open interest. You will be in a much better position to assess the mood of the market and adjust your position accordingly.

So, remember, trading is a game with your own rules, a game of psychology and discipline. Numbers, analysis, data etc are secondary. What drives your decision-making? Each one of us has a unique risk tolerance. Some are more aggressive, some more conservative or analytical.

I’ve said many times, make sure you use a strategy that fits your risk profile and fits your daily schedule. Many traders fail because of their inability to understand themselves.

You need to ask yourself some questions:

• How do you handle stress?

• How do you deal with uncertainties?

• Can you cope with losses?
• Do you get euphoric after substantial gains?

• Can you detach from money?

• Is you patient?

• Are you flexible and willing to change during a trade?

• Can you admit being wrong?
These questions are related to fear, greed, and the adrenaline that interfere almost on a daily basis. Answer to them honestly and try to understand what drives your decision-making.

Your dominant personality traits will sooner or later influence your trading Let’s make a quick exercise. Write down your strengths and weaknesses when it comes to trading. Look at yourself from a distance and try to be as objective and neutral as possible.
By putting your traits down on paper, you force yourself to express your thoughts clearly. In my case, as strengths I’ve wrote down: analytical mindset, self-control, very organized and logical, passionate for trading.  And as weaknesses: inability to be 100% detached from money when I’m in a live trade, not the most patient trader when I’m scalping, the need to perfection sometimes affects my trading decisions. It’s a simple exercise aiming at understanding your personality traits, and your strength  and weaknesses.

In the end, all your dominant personality traits will sooner or later influence your trading and thus your profits (or losses).

So do yourself a favor and think about your personality type. And build your trading around your strengths, not your weaknesses. No trade and no strategy are perfect Expecting the perfect entry or exit, or expecting to catch the full wave, are things that are incredibly rare. I still struggle with this. Most of your trades will be far from perfect and this is the tough reality of trading.
If you expect perfection, you will suffer through a lot of frustration. And it goes without saying but, also, there is no perfect trading strategy. A perfect trading strategy is one that makes money in the long run, not a system that makes money with every trade. You may already have a profitable trading strategy in your hands, you just don’t know it because after every losing trade, you change it, or you want to adjust it so that the loss you just took could have been avoided. However, changing your system means you’re opening it to other potential losses.
Accepting that no trade and no strategy is perfect relieves you of a giant burden.

Things rarely ever go according to plan Let’s face it, things rarely ever go according to plan, even if you are organized and prepared. If you refuse to accept this reality and if you don’t work tirelessly on a solid trading plan with an effective action plan that covers as many possibilities as you might run into while trading, you are not going to survive as a trader. When you trade, it’s imperative that you know what risks you’re willing to take and how you will manage them if something goes wrong along the way. In trading, all uncontrolled elements are considered risks.
These are the factors that can always go against your trade. On the other hand, controlled elements are the tools that help you restrain and reduce the risks.

Know what you can and can’t control in trading So let’s talk about controlled and uncontrolled elements in trading. Your analysis is the first controlled element. You control how thorough your analysis is.

If you invest the proper time and knowledge into it, you’ll be able to come away with a well-educated analysis and assessment of a market. Timing The Entry / Exit is another obvious controlled element. You get to make the decision for where and when to act in the market and at what price to place your positions, targets, and stops. The market and

Time frame You Trade are also under your control. You decide when, where, how long, and under what settings you want to trade in.

Another controlled element: Risk-Reward.

It’s your decision to filter out trades that are not deemed to provide a sufficient risk-reward ratio. Position Sizing, another controlled element. You decide how much you risk on a position. It’s at your discretion to set the margin for error and drawdown.
You can also time how to secure your exposed position during major economic releases.  The schedule of these events is pre-planned and published ahead of time, so you have plenty of time to stay out, set stops and targets, reduce exposure or any other mean of protection from the upcoming high volatility. Training Your Psychological State is another thing which is somewhat under your control. Knowing your mental strengths and what you can put to use.

This also means being aware of the mental weakness you need to work on.
Capping your risk is also something that’s definitely done by your decision.  So are shifting and securing profits with stops and setting stop loss and  targets in realistic locations, relative to the market conditions.

All these elements are under your control. But how about elements you can’t control. The trigger condition is the first one.

You can never time when all the right conditions align to trigger a trade (or an exit). This sometimes results in doing things like missing the entry and jumping late on a trade or prematurely entering a trade. Available information is another uncontrolled element. As a retail trader, you are always on the short end of receiving the  relevant information that can affect your trade assessment. For example, information such as increasing volume is not available for forex trading.
Retail traders like you and me are left only with little information, such as chart reading and macroeconomic data.

We simply don’t have an information edge. And this is a risk. Price Volatility is also out of your control. When price moves in a strong manner, you can only see it after it happens.

It’s almost impossible to get a heads-up before a major move occurs, and your position will always be exposed to such rough events at any given time. Once you are in a trade, while the price moves, you cannot really do anything as it happens. The same thing goes for unexpected news events that affect our positions.  You can never know when they’re about to erupt and in which direction they’ll move the market in. Also, setting trade targets does not guarantee prices will reach it  before they reach your stop loss.

We have no control over what direction the market takes.  If you’re aiming for a specific RRR, it’s not guaranteed you will get it as expected. Your psychological readiness for specific events can hit you by surprise. Life Circumstances is another uncontrolled element. Maybe you’re having a bad day, or you’re facing a challenging period in your life, you’re tired, or demotivated.

Life circumstances will not always be optimal to support your trading. The point is: always acknowledge that there are more aspects that you’re not aware of,  that will affect your trading and expose your position to risk. Acknowledge that  these events can pop out of the blue and surprise you. Eventually, you will be able to spot new blind spots as they begin to form. You are overtrading, and you don’t even know it Overtrading is one of the most challenging lessons for a trader to understand.

If you tend to overtrade and you continue to overtrade, you will lose a lot of money.

You expose your money to the market any time you enter it. The fact is you could be overtrading, and you don’t even know it. If you are overtrading, there are several signs: – If you close a trade for a loss and you believe deep down that you shouldn’t have taken the trade, you are guilty of overtrading. – if you find yourself looking at lower time frames like the 5-minute chart and “discover”  some trades, even though you planned to use the H1 chart, again it’s a sign of overtrading – if you’re spending too much time gazing at charts, you become vulnerable to seeing  too much market activity, which again, might turn into overtrading – if you find yourself looking at charts for hours, attempting to “force” a trade, that  is not that obvious, because you don’t want to feel that you wasted time, again, a warning sign The biggest issue is that many traders are clearly unaware that they are over-trading at the moment.

It is really possible to get fixated on a less-than-ideal trade setup, lose track of your trading plan, and become uninformed about whether or not you are over-trading. If you are guilty of this, it is best to go on the offensive against over-trading  and revisit your trading strategy and plan a better a trading schedule ahead of time.

Not having a position is a position The number of trades often does not translate into large profits. Instead, the effectiveness  of individual trades makes the real difference. After a successful trade and a significant profit, you can be tempted to continue trading, but the market doesn’t work according to your commands.
After a few successful trades, you may start losing. Here’s a quick piece of advice: Set a limit on the number of trades you want to open in a single day. Keep up with this plan, and if you feel like opening one more trade, remind yourself that there is always tomorrow. Again, I’ve said many times in the past, not having a position is a position.

Some of the best trades in life are the ones you do not take.

Get rid of anything that doesn’t bring you value Each one of us has different ways of understanding and processing trading situations. When we look at  a chart, we all see things differently and we experience the market events uniquely. When you have a teacher or mentor, you can try to learn the concepts they share with you,  but you can’t expect to have the same results. What works for them can contribute to your success, but in order to really succeed,  you will need to custom tailor everything you learn, to fit your special way of thinking. This is why someone might trade supply and demand successfully, while you may be failing,  despite both of you using the same concepts.

Don’t just use a strategy just because it’s popular, or you read somewhere that this is the best way to trade. Customize it to fit your need, get rid of anything that doesn’t bring value and adjust it to your own beliefs. Now, if you’re looking to further improve your trading psychology and correct more mistakes, this video will definitely help you.  And check out our academy program if you want to further level up your trading.

Until next time!

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