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Developing the Professional Trader’s Mindset



One of the things I wish I knew before I started trading was how influential my mind was going to be on my trading and how much of an emotional roller coaster I would go on. Many traders have heard others talk often about “psychology”; however, I always wonder how many people truly understand what it is they mean when they talk about it and its relationship with trading. 

In reality, your mindset controls anything you do and, consequently, any endeavour you undertake. Trading is no different, and it could be argued that this truth is even more applicable in trading, as your money is involved, which triggers many emotions inside us.

You would have thought previously about why some people are so successful in life and others are not. How many books have been written about having a positive attitude and taking action toward your goals? There is, and always has been, a single ingredient that separates people who are successful in life from people who are not: It is the mind and how we use it to drive ourselves toward the goals we set. Unfortunately, many people live their lives with an endless series of “what if” questions that they ask themselves.

When most people start trading, they never consider whether they are well prepared and have the necessary skills and attributes to be successful. This is likely to be one of the last things on their mind. Somewhere along the path of trading, however, most people come to a realisation that trading is probably not as easy as they first thought.

With this humbling realisation comes a search and investigation into what makes a successful trader. They seek out what they need to do and what they need to learn about in order to make all of the money they dreamed of initially. They attend courses, converse with other traders further along the path of trading than themselves, and make a committed effort to learning this new craft.

All the tools may be gathered together—set up a new Valutrades account, subscribe to some analysis mailing lists, attend some trading workshops—but successful trading still has its foundations deep within the individual.

It is probably only when people start trading for real, with their own real money, that they begin to feel the emotional strains and pressures and then realise that they themselves may be a bigger part of the overall equation than they thought initially. 



Although we can discuss at length a list of skills and attributes that successful traders have, there is one overriding influence on your trading success, and that is your attitude. I believe that your attitude will determine whether or not your trading is profitable. Your attitude is more important than any of the other character attributes required for successful trading; it is more important than your market knowledge and your degree of skill. 

I have heard words to the effect of, “It isn’t what happens to you that is important—it is how you react to it.” I believe it is applicable to trading. It is not what the market does to you but how you react to it that matters. For example, it is not important when you are faced with yet another losing trade; what is important is how you react to that situation. 

Do you get upset and allow your emotions to cloud your judgement, or do you react calmly, accepting that loss is a part of trading, and move on from the experience? These words are true when applied to anything in life, yet I don’t think many people understand how powerful that statement really is.



Confidence would have to be one of the most important character attributes of successful traders. Confidence does not mean overconfidence or arrogance, but just the belief that someone has in themselves. Though I suggest that confidence is essential in a trader, it is competence that yields confidence. 

Think for a moment about something that you are very proficient at. It could be anything. Then think about how confident you are doing it. Next, think about something that you are not very good at, and think about how confident you are doing that. Without fail, you are confident in doing what you are good at and lack confidence in doing something that you are not good at.

Why is confidence so important? If you do not have confidence in yourself, then you are not going to have confidence in the trading plan that you develop, and consequently, you are not going to follow this trading plan. Generally speaking, the No. 1 reason why traders fail is because they have no trading plan. Those who do fail because they don’t follow it. Even if you go to the trouble of developing a robust plan, if you lack confidence in yourself, you are not likely to follow it, anyway, and therefore, you are probably going to lose money.

Another consequence of a lack of confidence is the problem some traders face in what is colloquially known as “pulling the trigger”—being hesitant about entering a trade in the first instance. Many people who have a problem with pulling the trigger are afraid of what might happen when they enter a trade. In the back of their mind, they are thinking about the possibility that they may actually lose money in the trade. 

They may not have correctly anticipated the future direction of the price. However, the reality is that no one can anticipate accurately the direction of prices every single time; therefore, it is not really worth being concerned about. What should provide you with confidence in this situation is the risk management rules that you have established. You know that should you get the trade wrong and lose money, you are going to lose only a set amount, or thereabouts, because you have diligently determined how large your trade will be and have set an initial stop loss. As far as my own trading is concerned, I always set initial stops, and this provides me with a fair amount of confidence in entering a trade in the first place.

How do we develop confidence? We develop our competence. Read quality books, subscribe to newsletters, join a traders’ group, attend every free trading seminar you can, and attend trading workshops. Even something as simple as following my daily analysis on the Valutrades website will give you insight into the way I assess my trading opportunities and help develop your competence.

Learn about the way the market operates and how you react to certain situations. Develop your analytical skills and prepare your mind for situations that you may face in the market. Just as importantly, set stops and follow them. This will help many traders overcome their problem with “pulling the trigger”.

Finally, I always say to my clients that you need to be able to complete the following statement: “I am going to be a successful trader because ...” 

I won’t give you the answer because I truly believe that you need to discover the answer for yourself. 

Many people suggest that trading has a reasonably high failure rate, so I want to know why my clients think they are going to be different from most people—what is going to separate them from the majority? People who cannot come close to completing that statement probably have a long way to go before they can trade successfully. I mention this here because I believe the word “confidence” should appear in most answers to this question. It certainly appears in mine.

Good luck!

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The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.

This post was written by Graeme Watkins

CEO Valutrades Limited, Graeme Watkins is an FX and CFD market veteran with more than 10 years experience. Key roles include management, senior systems and controls, sales, project management and operations. Graeme has help significant roles for both brokerages and technology platforms.