I think anything is possible
if you have the mindset
and the will and desire
to do it and put the time in.
Trading requires cultivating the right mindset. You must be relaxed, logical, perceptive, and ready to tackle anything the market throws at you. Unfortunately, this sounds much easier than it actually is. Trading is a difficult profession with unique issues that other professionals do not deal with. If you can identify these issues, address them, and halt their influence, you can cultivate the mindset of a winning trader.
Why is trading more difficult than other occupations? In many professions, a group of scholars have clearly defined foolproof ways to gain success. And the leaders of a particular profession argue that if one follows these well-proven pearls of wisdom, success will surely follow. In most professions, these claims are somewhat supported, but when it comes to trading not so. Many so-called trading gurus claim to have discovered the Holy Grail, but oftentimes these claims only offer false hope to those seeking easy money. Think for a moment, I read an advertisement recently claiming 900% in 5 years. That is 180% per year. Take $10,000 at 180% per year and using the rule of 72 your money doubles approximately every 3 months. That means in 5 years your $10,000 is equal to $1,721,036, why are you working? Why are you promoting and selling this system? Think!
Seasoned traders warn, for example, "Do not trust anything you read or anything you hear." The general consensus is that most of the information out there about how to trade is suspect, and that the only way you'll ever separate the truth from the fiction is to try it all out and find out for yourself just what works and what does not. Seasoned traders also warn, "There are no universal rules for traders to follow." Conventional wisdom is only correct when it is correct. History only repeats itself when it does. Lack of consistency in the rules of the market and in how the market behaves can be disheartening. Many seasoned traders warn, "Trading is a profession where you should go in assuming you'll lose more money than you'll make." Considering this advice, it is no wonder that novice traders have difficulty cultivating the right mindset. Trading consistently seems difficult if not impossible.
The good news -> It is still possible to overcome these limitations. First, it's vital to remember that there are indeed actual traders who have studied the markets over years, made efforts to build up trading skills, and became profitable. You can't turn a $5,000 online investor account into a fortune, but with the proper trading plan, the proper attitude, and with a few simple trading rules designed by you and for you, you can become a very successful trader. Again, it's just a matter of having realistic expectations, the proper training and mentorship, and the necessary experience to trade under a variety of market conditions.
Second, the right attitude is also essential. Once you face the fact that trading is not easy money, or that you won't become rich overnight, you'll be able to prepare yourself mentally. It is merely accepting a few disconcerting facts about trading. If you know that you need a sufficient amount of capital to survive the learning curve and the draw downs, you'll manage risk properly in order to have as much trading capital as possible to invest. If you expect more losing trades than winners, you won't be disappointed when you face losing trade upon losing trade. When you know that your seemingly foolproof trading strategy is bound to fail when the market conditions change, you won't be very upset when it does indeed start to fail. By facing the cold, hard facts about the pitfalls of trading, you'll neutralize them.
Trading is a challenging profession, but there are many traders who have met the challenge and have the winning track record to show for it. By meeting the challenge through hard work and dedication, you can also be a member of this small, elite group of winning traders.
Reprint from Prudent Trader August 2005