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4 Steps To Having A Profitable Trading Mindset

Nov. 13, 2012 10:34 AM ET
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Over the years, OptionSIZZLE.com has seen explosive growth in its membership base. I want to thank you, readers and traders, for your support and for allowing me the opportunity to shed some light into the seemingly mysterious world of options. It is no secret that I love what I do. I can't think of a more satisfying job than being able to share and teach what I have learned, from the ground up, as a runner filling orders at the CME (Chicago Mercantile Exchange).

It saddens me to say that I have noticed a troubling trend recently which is becoming an epidemic. I call it AFT and it is a direct result of the social media which bombards our day. I have some thoughts on how to cope with it. If you have already experienced some of the symptoms, then here are some ideas to alleviate them.

AFT is an acronym for Average Frustrated Traders and how I wish I could take credit for inventing this term. I am a little embarrassed to say that I learned it from a pick-up artist. When I was a much younger adult, I wanted be successful with women, so I read some books on how to navigate the singles scene. One book, in particular, spoke to me. It was, "The Game," an inside look at the moves of some very successful seducers.

There are so many parallels in this book to trading. While pretending to be confident and comfortable, most men tend to find themselves intoxicated, with a large tab, at the end of the night. The pick-up community refers to these guys as AFCs (Average Frustrated Chumps). That is where I borrowed and adapted the term, AFT (Average Frustrated Trader).

It is known that eighty percent of traders fail! The difference between AFCs and AFTs is that trading is a zero sum game, while meeting people is not.

This post on the OptionSIZZLE fan page, and the subsequent reaction, startled me:

The funny thing is that I was not talking about myself! I was simply congratulating one of my newest students on a successful week. The reason I love to teach is to help those people that are motivated to become among the twenty percent of traders that succeed and make money.

Shortly after my post, a fuming AFT offered his opinion and he was looking for a fight. Instead of being happy for the success of a fellow trader, he takes the time to devise this response:

Now Stuart may have had a number of legitimate reasons for being disgruntled that day. He could have had a rough week trading and lost a lot of money and it angered him to see someone else making money. Personal frustrations can lead to misplaced rage. I am not trying to pick on Stuart. Keep reading for clues on why people behave as they do.

Because so many fail at trading, there are a lot of these AFTs in the lurch. Think of these people as emotional and time vampires. They will suck your time and energy and cause you to experience great frustration. Any rational efforts you make to defend yourself just falls on deaf ears. Until an AFT can change his fundamental mindset in a positive direction, there is absolutely nothing that you can do to facilitate that change.

I have an up close and person view of the investment industry. It's not pretty. There are a lot of bad people out there trying to take your money with bogus and overpriced services. I recognize these scam artists because they are active on trading forums or on Twitter, yet they lie about their trades and their profitability. It is a small industry and I have gotten to know most of the players, as well as their trading style. Many, but not all, are unscrupulous. To be honest, I DON'T CARE for these people and can't waste my valuable mental energy trying to figure them out. I have my own career to pursue and I'm not a private eye getting paid to expose them.

Who cares? Their lies don't affect you. Worry about yourself first and always. Don't waste your time trying to call out these guys. Don't lower yourself to their level and waste your positive energy on them. You will only get sucked into their negative energy.

The lesson here is don't let obvious things become an obstacle. Trading is hard, but so is everything else in life, like becoming a professional athlete or the CEO of a Fortune 500 company. Every day, people succeed in reaching their goals and will continue to do it. The key is to state on your goals, focus, work hard, avoid the noise, and maintain a positive attitude.

4 Tips on Changing Your Mindset:

Think positive - Focus on yourself and find ways to continue to sharpen your edge. Work on building up your strengths and eliminating your weak spots. Don't take your frustration out on others. If you find yourself doing that, recognize it and apologize immediately. Find other ways to vent like working out or just stepping away from the situation.

Visualize - Most successful people use this very simple and common practice to become the success story that they envision themselves to be. Think about what a successful trade looks like and how it would feel to execute it. Visualize what a losing trade would look like and how you would react. This practice of visualization will prevent a lot of anger so you can spot trouble before it starts. Losing trades are an unavoidable part of the game. Learn a healthy way to handle that without ruining the rest of your day.

Eliminate - If there is someone you don't trust or believe, then eliminate them. Don't waste your time trying to figure out their issues or help fix them.

Educate - The market is not a static entity. You need to continue to learn and be open to different techniques. There are thousands of books and systems available to help you trade. Only purchase products that you believe offer you value by education, saving you time or showing you a new strategy to make profits.

So, on that note, I hope you enjoyed this article, and I'd love to hear what you think.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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