Going into 2021 I am prepared with a new kind of Trading Mindset! This comes through months and months of preparation as my knowledge account increases. Now I apologize for only writing one blogpost in December, I have been truly busy refining my strategy, studying, and of course, the holidays!
Preparing My 2021 Trading Mindset
Tracking My Mindset with TraderSync
As many of you who follow me on Twitter know, I have begun to really track my mindset ie. emotions, thoughts, feelings, behavior etc. that goes on while I trade. This is detrimental to most traders as many of us get hung up on the two common trading emotions; Fear and Greed.
As a stock goes in our favor, many have a hard time locking in profits because most become greedy. The stock goes higher and many think they deserve more and more and more profits. Likewise when the stock goes against a trader, many still hold and hope for the idea of either breakeven or that the stock will eventually turn in their favor. Both emotions can be toxic with the wrong Trading Mindset.
Another example of fear/greed/wrong mindset is when a trader with poor training freezes when a stock goes below their risk, especially if they have little to no trades/buying power left in their small account. I fell into this category. Following Tim Sykes #1 rule of cutting losses quickly becomes vital for this instance. But most freeze, the time starts passing by and all of the sudden it’s been 10 minutes of the stock trending against your plan. Fight or Flight begins to sink in. The question becomes, “Do I cut losses quickly now or do I wait to see how the stock plays out and base my plan off of the next evaluation?”
Preparation Meets the Right Trading Mindset
Trading Goals/ Trading with a Plan
Because I was a trader that froze/hesitated to sell stock when I could see that they were about to go against me, I began reading The Daily Trading Coach by Brett Steeenbarger. This book has become my trading bible. Becoming my own trading coach has been training me to have the proper Trading Mindset going into 2021. As I continue to read on and train myself with elite trading habits, the ability to recognize when a trade goes against me is no longer a fight or flight trait that I hesitate over.
Many have heard Timothy Sykes talk about cutting losses quickly, having the right trading mindset, and there being no such thing as over preparation only under preparation – this couldn’t be any closer to the truth. If you haven’t heard of Jack Kellogg, then click this post. In the last webinar he gave on New Year’s Eve (click here to apply for the trading challenge) he spoke a lot about Trading Mindset and that really made sense to me, along with; his break down of different charts.
As I have been up studying very late at night and up early in the mornings studying more, I have come to realize the patterns I am preparing for and I have the right idea of how they should behave. By training tirelessly and preparing my mindset, I know that when a trade looks off, cut the fuken loss that second. NO HESITATIONS! This has been proven to be true from my video recaps (visit my YouTube channel).
The Right Trading Mindset
No Hesitations = No Regret
I can’t stress cutting losses quickly or at least when your risk is hit. But when the stock bursts past your risk by a mile so fast that you freeze, how can you manage this? Well, there are a few options:
- Gain so much screen time Learning Level 2 that you can gain a sense of when to cut your position before your stop is blown through.
- Know your pattern inside and out to gain an idea of the stock not following the right foot steps.
- Make several fall-out plans. This includes what you plan on doing in the advent this happens.
- Pre-prepare a stop that is a fail-safe below your risk.
- Slap below/above the bid/ask (varies if you are shorting or going long) until you can get out.
- Try and wait for the stock to move back in your favor and have your exit price submitted incase it hits your exit level.
- Averaging down/up (Insanely risky and should be left to the experienced traders as this is a good way to blow up your account.)
- NEVER hold and hope. Buck up and get out when you can and take the loss.
No plan is fool-proof but we can prepare as much as possible to coddle our emotions when an outlier throws us off our game. The market is like a child, predictable to an extent but having a plan incase the worst happens is always a must. Although we do our best to prepare enough to avoid accidents and mishaps, a parent always has an idea of the closest hospital incase the worst happens. The same goes in trading. We develop many strategies and prepare our exits but sometimes the speed of the markets throws us for a loop. What is our hospital plan ie. exit strategy?
The Best Way to Prepare for an Unexpected Loss
Managing the Right Trading Mindset
The best way to manage a position is by mastering our mindset. The best way to manage our mindset is by preparing our exit strategy. Having the right trading mindset works by how well you can become accustom to cutting your losses appropriately. This is different for everyone as some cut quick and others cut when it hits their risk. The lack of an exit strategy/lacking a plan is the death of traders.