When it comes to day trading and investing success, there is no question that the battle to win this game starts and ends in your own mind. The Law of Attraction is an important force of nature to understand and it is very real. Thoughts are energy and whatever you are putting into the world is going to come back to you. Whatever dominates your thought process tends to find you. Now this of course is not to say that whatever you conjure up is just going to appear. But, your thoughts effect your decision making and actions. Becoming a great trader takes a lot of hard work, practice, knowledge, and skill. However, whether you choose to think positively or negatively, the results will be a direct product of your outlook. If you are consistently hanging around negative friends or family, it will train your mind to be negative as well. It is of max importance that you pay attention to the regular thoughts that dominate your thinking and keep them in-check every day. The importance of positive thinking of course does not just apply to trading and investing, but to life in general.
Whether it be day trading or investing, your biggest enemy is not the market maker, other traders, algos, hedge funds, your broker, or high frequency traders working against you (although they can be). The biggest enemy is staring back when you look in the mirror. Your lack of patience and resilience, your fear, and your self doubt, are the true adversary. The mind really is a battlefield and the enemy (self-doubt) is out to break you. Wall Street and the media are out to confuse you, scare you, cause you to be flustered, so you give up your money. Trading is a zero-sum game and therefore for Wall Street to win (generally speaking), you have to lose. Peter Lynch said..."The real key to making money in stocks is to not get scared out them." He was right on point. The majority of the time you will lose on trades is due to the fear of seeing red on your screen. Every short trader we have run across has had times where they bet against a stock and as it pushed against them, fear took over and they exited for a loss, just to watch the stock drop remainder of the day. Every long trader has had a situation where a stock was going against them, they became afraid and exited, just to have the stock bounce back. Recent activity in Tesla stock is a great example. The stock dropped to $350 (from $900) and scared everyone out, just to rebound to $800 again. Warren Buffett said..."Wall Street makes money on activity, you make money on inactivity." No words could be more truthful when it comes to investing and being able to stay patient in uncertain times, or when you have an unrealized loss, comes back to your mindset and thinking.
We always pay very close attention to the words that come out of people mouths as they can give you a deep insight into their general mindset (negative or positive). You may not even realize that you are being negative at times if it is all you surround yourself with. A few great books we highly recommend for improving your mindset is 'The Power of Positive Thinking' by Norman Vincent Peale and 'Think and Grow Rich' by Napoleon Hill. Don't just read these books, but study them and take notes. Put into practice what is discussed and ask friends to help by letting you know how you are changing or progressing. Negative thinking can also turn people off from wanting to be around you. It could be friends, coworkers, a significant other, or even your wife/husband. Sometimes people get so caught up in the negativity, they mistakenly think of it as 'reality.' But, reality is actually just your specific perception and everyone's tends to be a little different. One thing is for certain, this type of negative thinking can absolutely destroy your trading and investing success...the game is so much about emotion and psychology and this is all rooted in your mindset and thought process. If you are constantly feeling negative when trading, it will greatly effect your decisions. If your general state is emotional, negative, and fearful...your trading results are going to be directly impacted and it most likely is not going to be for the better. Almost 100% of people who are constantly in a negative state are going to fail because of their thinking alone. Chances are they are feeding themselves lies and we must recognize when this is happening. Telling yourself you can't succeed or that you are not good enough is simply not true. You can succeed and you WILL!
It is very important to keep in mind that Wall Street (via the media) wants to cause fear and uncertainty for traders and the investing public. They want to create confusion and simply cannot take your money, if you do not become beholden to your emotions. This is something that can certainly be improved with the time and experience of trading. And of course certain market conditions such as high volatility and uncertain times can increase the fear. Having a highly over-leveraged position is a great way to upset the brain into a bad decision. Some humans are of course going to be naturally more emotional than others (you know who you are), and improvement will take time and effort. Without question, majority of times a trader panics due to fear and exits a position, it is going to end up being a mistake. Work hard on assessing your own personal strength and weaknesses and improve where needed. Many aspects of life are out of your control and are a lot about chance. But, the best thing about mindset is that it can actually be controlled. It just requires great awareness, attention, and repetition. Nothing good comes from negative thinking, so you might as well force out the fear and choose to think positively. Focus on the emotion of FAITH in yourself as it helps root-out fear. There is no question self-doubt is an account destroyer and strong conviction will have an extreme impact on your trading or investing success!