Trader Mindset Should be…

1. Trade only with money you can afford to lose
So many traders start on trading out of mood by nervousness or any other disturbances. They worried to change their life; they hate their work, etc. The problem here is that usually people approaching trading from this trader mindset are using money that they really can’t afford to lose. If the money in your trading account could be put to a better use elsewhere in yours or a family member’s life, than you should not be using it to trade with.

2. Always use a stop loss

This is another tip that many people, surprisingly, don’t follow. Some traders think that if they don’t use a stop loss they are more likely to make money because they are giving the trade room to possibly move against them and then come back in their favor. The problem with this is that what happens when the trade doesn’t come back in your favor? It only takes one instance of this happening to blow out your trading account. This situation Trader mindset disturbed.

3. Take time off from the markets

Another cardinal sin that many traders commit is over-trading. Especially after big-winners, many traders tend to jump right back in the markets because they are riding a feeling of euphoria that gives rise to a nearly over-whelming urge to enter another trade. The best thing you can do for your trading account’s equity curve is to shut down your computer after a great trade, do something else, get a hobby, just don’t look at the markets for a day or two after a big winner, give yourself time to calm down and become objective again.

4. Learn to think in Risk to Reward scenarios

Most people are terrible at taking profits. It sounds weird, you would think taking profits would be easy, but as any experienced trader can attest to, it can be one of the most difficult parts of trading. The issue is that when most traders get up a decent amount of money they don’t want to close it out because the market looks like it will keep going in their favor. What ends up happening however, is that if you don’t close a trade out when it is in your favor, you will inevitably close it out when it comes crashing back against you, for what usually will be a much smaller profit, if any.

The way to remedy this is to view each trade setup as a risk to reward scenario. Typically a risk to reward ratio of 1:2 or greater is desirable, a risk to reward of 1:3 or 1:4 is excellent. Setting your target at a distance that will net you 2 or 3 or 4 times your risk will take the guess work out of profit taking and will make you much more likely to take a profit when the market is heavily in your favor rather than when it is moving against you.

5. Trade higher time frames

Stop trying to trade off have 5 or 15-minute charts. It is essentially a huge waste of time. Every statistic on professional traders shows that traders who hold trades for days and weeks or even months, always out-perform people who try to dip in and out of the market multiple times in a day. Learn to trade off higher time frames and you will create a much more stress-free trading mindset that will ultimately work to build your trading account much faster than what would otherwise be possible. For gain success trader mindset should be fresh.