Hi there friends, fans, followers and family! I trust you are doing majestically splendid!
This article will have a different twist than most. We will be discussing the mental game of trading, as it relates to money. These are some specific tips and tricks that likely will help you trade profitably!
You have likely heard trading is 80% mental. I mean, it’s a different number every time it’s used, but the takeaway is the same. Trading profitable is hard. Below are some of the mental tweaks you can easily consider deeply contemplating on, which might help some of your roadblocks.
#1 You are not greedy:
Here’s the deal. There is this saying ‘the stock market is controlled by fear and greed’. I simply do not believe that’s the case for all market participants. Sure, there are some greedy people involved. However, most of use simply want a better life for our family. We want to travel, give, share, help and motivate. Which is the exact opposite of greed.
This is the trick: If you think you will become greedy because you make money in the stock market, then will your brain ever allow you to make money trading? Not consistently. At some point, you’ll give it back. Why? Because your subconscious doesn’t want you to be greedy. It’s really that simple. If there is even a chance you can become ‘greedy’ from making money in the markets, your mind won’t allow that to occur.
#2 Pull some money out and reward yourself:
This one is also totally crucial. Many traders get a number in their heads. A goal, an objective. And most people pull out zero profits until that goal is hit. NOT smart.
You see, most traders do actually go up at some point in their trading. Similar to gambling. Did you know I’ve been up every single time I’ve ever been in a casino? Even if it was like $5… I’ve never lost (until I kept dinking and playing. HAHA)
Now, one of my rules is, if I go up, leave. $5, $20, $123.43. Take the winnings and leave. You had fun, you had some entertainment, maybe you had some free drinks, now get out of here.
With trading I TOTALLY realize we all want to make bigger gains, faster gains, quicker profits. However, if you do go up nicely on your account, pull some out. A perfect example is a trader I met here in Nashville for lunch today. He said he took a $10,000 account and turned it into $23,000 trading futures. And not only that, but he had multiple up and down swings from $23,000 back down to $19,000, back up to $23,000 back down to $18k and so on. But what inevitably happened? He lost it all. Why? Because he wanted to get to $50,000…
If your brain does tons of hard work, thinking, contemplating, deliberating and decision making, it wants to get rewarded! One of the first rewards I ever bought myself was a new refrigerator. Every time I opened it and that cold air hit me in the face, I felt great!
#3 Have predetermined ideas of what to spend the money on
This coincides a lot with the above. It just comes down to proper goal setting. If you know what you are going to spend the money on, it becomes more likely that you will actually pull your money out and spend it.
Preplan your trips, vacations, purchases and have exactly how much it costs. And when you see the positive PnL on a trade, pull some off and allocate it towards those items.
#4 It’s okay to love money, that doesn’t necessarily mean you are evil.
When you trade well, there should be one end result. You make money! Most of us go around wishing for more money, asking for money, hoping for money money, wanting to be around money, we simply love money. YET, many people equate loving money with being evil. But is that factually accurate?
This is another mental aspect of trading which I dive deep into in my new book. I know it sounds kind of scary and sacrilegious, but just give it a read.
Simply know and realize you have the power to determine what you do with the money you make. It’s all in your mind. If you are evil, you’ll become more evil. If you are a loving generous person, you’ll become more generous with more money.
I’ve seen way to many traders sabotage themselves because they are ‘afraid of the end result’ of trading successfully, which is making money.
#5 Don’t put all of your eggs in one basket.
You guessed it. This is another idiom I dive into in my first published book.
I accepted this all of my life, until I heard Marc Cuban say once “diversification is for people who do not know what they are doing.”
If we think about it, in order to make that new house in cash money, we probably have to ‘go big’ on a specific investment or trade. Now, the good news is the biggest common misconception is ‘betting big means losing big.
Only in gambling.
In trading, one can easily put in $100,000 into a trade and lose $1,000 if they are wrong but make….
MUCH more than that if they are right.
Below is a chart example on AAPLWealth Strength IndexAAPL is Moderately Up and trending Up
Here is an example on Boeing: Ticker BA
I actually have video evidence of this one. Click here to watch my analysis on this beast.
So, if we do the same math as the above example on AAPLWealth Strength IndexAAPL is Moderately Up and trending Up.
$1,000 risk right? Entry I had in the above video, $377.25. Stop loss $371.88 The difference between those numbers = $5.37
1,000 / 5.37 = 186 shares
186 shares of Boeing would cost $70,168. And what would the risk be? $1,000.
Saying this to say, risk is key. Ever so often there might be trades, investments or stocks that are just such a screaming buy, if you put in a SOLID investment, the risk can still be limited. Meaning, it might “feel” like all your eggs, but it’s not. Because you have the downside protected.