Let’s face it, there’s a reason why trading is on the rise. The idea of working for oneself, working from home (or the beach, restaurant, another country—wherever you may be), and potentially earning a consistent profit through trading stocks or another asset sounds, needless to say, very attractive. Add to that increasingly easy access to the market, widespread internet availability, readily shared knowledge and expert technical analysis and it makes sense that more people are trying to invest and trade on their own.
But, this belies several very important points - trading - whether one is trading stocks, ETFS, options or are in some other market - is difficult. It requires market knowledge, experience, a willingness to study in detail whatever market you choose to trade in, and an understanding that trading requires risk.
But, as professional trader Matt Choi, who runs a successful trading education company, Certus Trading, notes, successful trading also requires another quality on the part of traders and investors that is just as important: namely, the right temperament or state of mind.
In 2014, Matt Choi, along with Brian Tracy and other business experts, wrote a book focused on the mindset required for successful trading. Titled The Winning Way: The World's Leading Entrepreneurs and Professionals Share How They are Winning in Life and Business and You Can Too!, in the book, Choi details three psychological mindsets that are truly needed for a trader, regardless of experience, to be successful.
The right psychological mindset is something that Matt Choi continues to emphasize, commenting: “The qualities of discipline, perseverance and action - these qualities are central to the type of winning mindset that I emphasize to my students. So is diligently planning, being confident in one’s strategies and refusing to panic when experiencing a loss.”
To understand why Matt places so much importance on psychological mindset, it’s helpful to know his early experience with trading. Always interested in markets and trading, Matt began trading in 2001. Experiencing initial success, by 2005, however, Matt’s success as a trader had dwindled. He had spent thousands of dollars on programming complex trading systems that didn’t work, and, in short, he was desperately trying to figure out a new path in trading that would work for his own goals.
It was at this time that Matt met the late George Fontanills, one of the leaders in options trading. True, George mentored Matt on trading strategies and techniques, but most importantly, he guided Matt in finding his trading personality. That set the foundation for Matt to develop a new mindset when it came to his own trading.
Matt Choi explains, “In 2005, I had reached a low point as far as trading. I needed a mentor like George (Fontanills) to help me understand my trading personality and what type of trading would be most suitable for me. That was step one. More importantly, I needed a mentor like him to send me on the path of developing a winning mindset.”
Matt then adds, “Mindset is so crucial. Oftentimes, success in trading depends on timing. It depends on attacking markets when opportunities arise and relying on risk management strategies when you need to preserve capital. But, you can’t do that if you are caught up in emotions or self-doubt or are not disciplined as a trader.”
Regardless of bear or bull market, the opportunity for success in trading is there - the question traders should ask themselves is how is their trading mindset and do they have the winning mindset to achieve success.