When aspiring traders approach the markets for the first time, they come as if trading was a conventional business. Later, they discover the primary enemy taking away their potential success: their mindset. Let’s explore some mindset shifts that a trader needs not only to succeed but as psychologist Dr. Steenbarger would say: “To do something great, you are meant to do something great”.
Survivance or Income? Long-term Vs. Short Term
“Bringing the short-term chaos to long-term order” is the title of a chapter of one of the books by Larry Williams. This statement lets us infer two things: both sides of the trading game deserve Importance.
The best way to interpret that is by looking at the short term as an income generator in contrast to the long term as the mindset to stay in the game and develop a trading career.
This shift is crucial for those who aspire to trade markets, but the propagandist influence of becoming a millionaire overnight may sink their motivations.
Probabilities: Every Moment In The Market Is Unique
Understanding that every trade in the market belongs to a unique moment is an idea that could help traders dispense with the biases of technical analysis as a guarantee to predict future moves based on historical charts.
Mark Douglas advocates for this concept, not to approach markets as aleatory environments but to harness the probabilities of a specific space and moment regarding the price action and its motives.
Intrinsically, what this notion stands for is the apprehension of psychological patterns riding a price move as possible factors in the future instead of an exact market formation as insights into what can happen next.
All traders know that from a range, a breakout needs to emerge. How many of them can trade it without getting trapped in a false one first? What are the probabilities that a breakout can occur in the next move from the moment a trader starts analyzing a price chart?
Where Are They? Put Your Entry Where You Would Place Your Stop
Now that we have shifted our short-term urgency and looked for probabilities, what does Dr. David Paul tell traders about entering a trade? Where are those short-term and long-term probabilities?
Typically, big market players move the price toward specific areas purposely. They need to because of their position sizes. They cannot simply buy a lot without a lot of sellers and cannot sell largely to an empty globe of buyers. They induce a buying or selling crypto market sentiment to feed their speculation.
Some call it manipulation, and others liquidity runs, stop hunts, etc. In any case, in the words of Dr. Paul: “The next time you enter a trade, place your entry where you would place your stop-loss and see how the market moves straight to it.”
Adding to Winnings And Following a Trend
Finally, all successful traders, from Richard Dennis to Paul Tudor Jones, and all those mentioned previously, highlight the effectiveness of following a trend, letting the gains run, and, if possible, adding more lots or contracts to the current position.
By implementing this mindset, traders achieve better risk management, risk-rewards asymmetry, and capital growth.
Conclusion
Traders need to find a balance between short-term and long-term goals while understanding that probabilities make every trade unique. Adding to winning and following a trend seems to be the best management mindset till now while making entries where stop-loss would have been placed will give your trading a different perspective.
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