Thursday Trader's Tip: Beginner Vs. Pro Trader
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Welcome to Thursday Trader's Tip - the free edition of The High-Performing Trader newsletter. Each issue presents to-the-point trading psychology advice that can be read in under 5 min.
This week's episode will differentiate a beginner vs. a pro trader's mindset in seven market situations.
Becoming a professional trader requires a long journey of deep change. Although certain brain features like certainty seeking, survival instinct, loss aversion, and hundreds of other emotional and cognitive biases cannot be changed or muted, we can leverage them to our advantage while replacing our beliefs with more conducive ones.
It's a process of unlearning and relearning.
In this post, I’ll guide you through 7 mindset shifts the new trader needs for consistent profitability. We’ll go through a contrasting view between a beginner's mind and a pro trader's.
Loss
Beginner: “There's something I did wrong. I need to always be on the right side of the market; otherwise, it’s bad trading.”
Pro: “Losses are part of the game. Did I respect my strategy? Did I perform well? If yes, the odds will show themselves in a series of trades. What extra information is the market giving me by stopping me out? How can I use this for the next decision?”
Strong Price Reversal
Beginner: "The market is against me! I need to do something to avoid this!"
Pro: "What is the market telling me? Is this typical? Is this a retracement or something I should pay more attention to? Is there a big motive behind this big move? Is this a good opportunity to add to my position?"
Lack of Setups
Beginner: "I need to be active in the market. I can't make money if I'm not actively trading! Maybe I should widen my watch list or go to lower timeframes."
Pro: "No signal, no trade. I won't risk my capital in a less-than-optimal trade. I fully trust my strategy. I let the market come to me, not otherwise."
Winning Streak
Beginner: "Finally, this is THE strategy! I cracked the code.”
Pro: "The chances of the next trade being a loser increase with each win; therefore, I have to be extra careful with my decisions and keep a clear mind moving forward."
Missed Trade
Beginner: "I knew it would go in my direction! Where’s the next opportunity? I need to compensate for this."
Pro: "In an infinite market, I missed one opportunity. I can't catch all the opportunities, nor should I blame myself for that. Was this trade truly valid? If yes, why did I lose it? Was I out of the desk, or did I doubt the setup? What made me doubt? What can I do next time not to miss this trade?”
Losing Streak
Beginner: "This strategy sucks. The market is against me. I'll oversize in the next great opportunity."
Pro: "What is this losing streak telling me? Does this loss go beyond my maximum drawdown? I'll lower my exposure until I get my loss back. I’ll analyze all my losses and see if I find a recurrent pattern.”
Good Amount of Unrealized Profits
Beginner: "I can already feel the winner! *screenshot* Gonna hold the trade a bit longer; I’m sure price will go further.”
Pro: "I know my edge. I'll wait until my take profit gets hit. The profits aren’t mine until I close position.”
For the beginner trader, these situations will likely trigger intense emotional responses, while pros view them as a natural part of the market.
Beginners' confidence swings with the outside events, while pro traders have a stable sense of confidence coming from within that doesn’t get shaken by external changes or short-term results. This grants them an objective read of the market.
Peaceful trading,
Sara
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I see it as being that if I make dollar in profit, I must keep the total of any losses less than a dollar until my next profit comes around.
I think you were the one who recommended the book "Best Loser Wins" which I had bought when it first came out in 2022 and never read it until now. Remembering I had that book on a shelf, thanks to you, was perhaps a Zen moment for me. I have read other trading psychology books over the years, but this one really strikes home. Thanks.
I like that--peaceful trading. This was a relatable post with a lot of good contrasts that work as practicals too. Three struck a chord that one never stopped until I began the coaching