Stuart McPhee on Developing a Trader’s Mindset
I kind of liked Stuart McPhee’s first day lecture on money management, so I decided to fork out some money to attend his second lecture titled “Developing a Trader’s Mindset”.
Just to recap, Staurt attributes 60% of a successful trader to his psychology, 30% to his money management and 10% to his system. Thus, this entire one and a half hours is solely dedicated to the mindset.
The core foundations to trading success lies in having:
- The correct altitude
- Confidence
- Patience
- Persistence and Perseverance
- Having goals. As a new trader, set yourself a goal of being in the black after your first year in trading.
- Discipline
- Control of emotions
- Taking action
- Reduce distractions from TV and internet
- Continual education through books
I became a winning trader when I was able to say, “To hell with my ego, making money is more important.” – Marty Schwartz
The reality is that most traders fail. Everyone experiences the same emotions. To succeed in trading, we need to think and act differently.
Stuart has the following advice for new traders:
- Be humble
- Be committed
- Educate yourself
- Be patient
- Keep it simple and realistic
- Focus on the right things
- Protect your capital
Here’s a personal insight I want to share with you. If you think about it, most traders focus on making money (and not losing money). That is where the mistake comes in.
If you consider any professional sportsman, he always focus on his game when he is playing. If he plays well, money comes naturally as part of his reward. If he starts thinking about the prize money when he is playing, very often he will play badly and ends up with less money.
It’s the same with trading. To be a successful trader, the focus has to be on the trading. Making the correct trades. To do what your trade plan tells you to do even though that trade might lose you money. If you can do that, making money in the long run will come naturally.