Trader’s Corner — The Winning Mindset when Trading the Stock Market

In today’s Money Weekend…how did you cope with it?…listen to a winner…from novice to professional…stay focused on winning…and more…

The end of the year is always a time for reflection and planning for the future.

If you have been trading the markets over the past year, you have had to navigate an immense market crash and then a V-shaped bounce that is still going.

How did you cope with it?

Were you shaken out of great positions during the crash?

Were you a little slow to start buying on the way back up because of your fear that things were going to tip over again?

Did you start chasing stocks higher as you realised it was now or never and you had better jump in?

Do you have memories of the stocks you should have bought that went gangbusters?

If there’s anything I’ve learnt about trading it is that you NEVER feel completely satisfied.

Even if you have a great year there will always be money left on the table. You won’t buy the low or sell the high. You will hold onto a loser a little too long or take profits just before the stock blasts another 100% higher.

It’s your attitude towards the inevitable disappointments of trading that will define whether you get sick of the emotional turmoil and give up or have the fortitude to break through to consistent money making.

How to Limit Your Risks While Trading Volatile Stocks. Learn more.

Listen to a winner

The greatest thing I watched this year was the documentary about Michael Jordan called The Last Dance. I won’t insult you by explaining who he is…

I see it is a crash course in the winning attitude.

There is so much to learn watching how he approached the game and responded to upsets and failure.

We all repeat the platitudes about having a winning mindset but what does it really involve?

Michael came back from his 18-month hiatus playing baseball and joined the end of the 1995 season, which they didn’t win.

His trainer said that they usually had a few months off, but the very next day after they were kicked out of the championship Mike called him and said he wanted to start training.

The next day.

His drive to win was so intense that losing that year, despite the fact he had only joined at the end of the season, made him jump out of bed the next day to start training.

They went on to win the NBA championship three years in a row.

Whenever anyone gave him a bit of stick he used it as fuel to fire up his playing. He would score 50 points right over the top of their head just to prove a point.

Basically, anything that would usually upset a player’s mindset and cause doubt did the opposite to Michael. It just made him want to win even more.

We all get knocked off course. But if the focus on winning is so acute that all obstacles are seen as part of the journey towards winning, rather than proof of our ultimate failure, not only will you have a much higher chance of success, but you will enjoy the journey too.

We have all seen the famous comment he made about losing, but it is well worth repeating here in the context of trading:

I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. Twenty-six times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.’

When I consider my path towards consistently making money in the markets, I can’t help feeling the missing link during the tough times was the winning mindset.

When you drill down deeply into the common flaws most novice traders have, I reckon we can analyse it based on the winning mindset.

From novice to professional

Why do we want to hold onto a losing trade?

We are sitting there looking at the screen as prices start trading at the price we told ourselves was the trigger to get out of the position, but all of a sudden our mind is flooded with reasons why holding onto the position is a better idea.

‘It might bounce back tomorrow, and I’d hate to have sold out right at the low.’

‘I’ve had a good month this month so I can afford to hold it for a bit longer.’

‘I’ve had a terrible month this month, so I’d rather not take another loss.’

‘This stock is being manipulated, I’m not going to get fooled by them, it should be going up.’

‘If I just don’t look at the price for a few days I’m sure it will bounce.’

But what are we really saying behind the conscious excuses we are making?

‘If I take a loss it proves that I’m a loser and I don’t want to lose, I want to win.’

But is that statement a winning mindset or a losing mindset?

If your ego is so frail that every loss creates a chink in your armour and every win makes you feel bulletproof, you have a losing mindset.

You will be tossed around by the market and will feel punch-drunk well before you get to a point where you make money consistently.

My son Daniel is six and I am learning a lot from watching him play. Losing for him is just not an option. He hates it. Every time he loses it is a final judgment on his worth.

Teaching him how to lose is still a work in progress but it is dawning on me that it is one of the most important lessons I can teach him.

I have been saying to him for a long time that until he learns how to lose he will never learn how to win.

It’s not sinking in.

Stay focused on winning

So, my advice to you if you have been tossed around by the crazy markets of 2020, is to use it all as fuel on your journey towards winning.

Don’t look back with regret. Think about what you could have done better and write it down somewhere.

Question whether it was the crash that caused your problems or your attitude.

The market will keep moving in weird and wonderful ways and we have to navigate it come what may.

Embrace losing as a necessary part of the business of trading. Really accept it.

Once you let go of all connections between your ego and winning or losing while trading, you will be a step closer to consistent profits.

So, my Christmas task for you if you want to be a better trader is to watch every episode of The Last Dance on Netflix.

Either that or you could just buy bitcoin and hold on for dear life while praying that it keeps skyrocketing! Which of course, can never be guaranteed.

If you are keen to get involved in the crypto space but have no idea like me and want to learn about it, you should definitely sign up for the Crypto Fast Lane Summit that Dinsey and Woody are putting on next Wednesday.

Regards,

Murray Dawes Signature

Murray Dawes,
For Money Weekend

PS: Make Profitable Trades, More Often — Trading expert Murray Dawes reveals his unique trading strategy designed to help you clock up steady gains in any market, while limiting your downside risks. Click here to learn more. 


Murray Dawes is the Editor of Pivot Trader and contributing Editor at Money Morning. He was one of five, from 5,000 applicants, chosen for a graduate position with the Swiss Banking Corporation — now part of banking giant UBS. The bosses quickly cottoned on to his potential and pushed him up the ranks as a futures broker on the floors of the Sydney Futures Exchange. Murray later broke out on his own and developed custom trading systems to trade leveraged financial instruments like futures. Due to his success, Murray became the ‘hired gun’ trader for Australia’s rich and famous. Today, Murray runs a trading service through Fat Tail Investment Research to help everyday Aussie investors use his advanced trading methods.

Money Morning Australia