In trading, your mindset can make or break success. Without a proper trade plan, it's easy to lose focus, succumbing to distractions, emotional decision making, and panic-induced errors. Conversely, adopting a focused and neutral mindset helps to zero in on the immediate market experience, and more importantly, your trade plan – a skill that separates winning traders from the rest.
In my experience with coaching and mentoring traders, most brand new traders are initially drawn to day trading by the allure of profits and the lifestyle that can come with it. Yet, the irony lies in fixating too much on these external rewards. Similar to an athlete cracking under pressure, excessive focus on the profits often leads to a myriad of mistakes. A singular focus on trading profits takes you away from your process - The focus is no longer on the trade plan, but rather, how much money is being made (or lost) on the session.
Fear and anxiety usually stem from dwelling on the past or worrying about the future. In day trading, this rings true. Shifting attention away from the immediate market action can spell disaster, particularly during critical trade moments.
The most common culprit for losing focus? Your profit/loss (PnL) on the day! The moment you start yearning for more profits, focus wavers. The urgency to win on a trade becomes counterproductive, often resulting in errors and a deviation from your plan. One of the best ways to defeat this urge is to come into the session knowing that you want to focus on executing your trade plan, regardless of what your PnL shows. It can also be quite helpful to cover your PnL during the session so it’s not visible. This approach increases the likelihood of executing your trading plan effortlessly and consistently, which shifts the mindset to one that is process-oriented.
While it's motivating to think about the potential long-term rewards that consistent profits can bring, there's a fine line between acknowledging that winning would be nice and feeling an absolute necessity to win on any given trade. Day traders must resist the urge to focus solely on the profits and instead focus on the ongoing process of how those profits are generated.
If you’re a trader who is motivated solely by the potential for profits, you need to acknowledge that this mindset likely won’t lead you to consistent profitability. Blocking this belief out may work temporarily, but a deeper mental shift is the key to true sustained profitability. Good trading process, with a real edge, begets profits.
In the end, the true spoils of day trading are for those with a bulletproof process, not for those that are looking to punch a daily lotto ticket. Regardless of near-term wins or losses, by focusing on the ongoing process, you can find fulfillment in your approach and ultimately develop a profitable system.