Trading Reports

What’s Your Mindset When Entering Trades?

As legendary trend follower Ed Seyokta said “everyone gets what they want out of the markets”.

This Trading Lessons builds upon the recent lesson where we discussed ‘what’s your why?’

You may now know your why, but is your mindset correct – do you truly believe you can achieve your why?

Every trade I enter I expect to win. I always play to win. But, I’m never attached to the outcome. I don’t mind if I win or lose on any given trade. I have no emotional connection to any trade or money.

Because I’ve found in life, sports and trading, the most engaged, but least attached, wins.

What do I mean?

I’ve done 10,000’s of trades and back-tested even more. From this I know I’m going to be right around 50% of the time.

Knowing this information I’m not attached to the outcome of any given trade. I don’t need to be right. My edge is in the identification of potential asymmetric risk vs reward opportunities and proper trade management (winners bigger than losers consistently).

Every trade I take will provide valuable lessons (feedback) and move me one step closer to my goals.

I don’t think of a trade I lost money on as failure, only feedback. Everything that could be conceived as a negative is re-framed into a positive.

I’ll cover re-framing in a future lesson as it’s a powerful tool.

A quick golfing example might help explain this lesson…

Imagine Tiger Woods is playing with an amateur golfer and they’re on the tee of a Par 3 that’s 150 yards over the water with bunkers to the right and left of the green.

What’s the amateur’s mindset?
Probably something like, “I don’t want to hit the golf ball in the bunker, and I certainly don’t want to hit it in the water. Wow, that’s a lot of water. I’m going to look silly if I hit it in the water”.

What’s Tiger thinking?
“Okay, 150 yards with wind slightly off my right shoulder and the pin position is back right. In my practice sessions I know I hit my pitching wedge on average 145 yards, the wind should add 2-3 yards giving me around 148 yards. That’s perfect, as hitting this ball 3 yards left of the flag will leave an easy uphill putt for birdie”.

With these mindsets, is it any surprise the amateur hits the golf ball in the water and Tiger has a 10ft putt for birdie?

The most engaged, but least attached, wins.