The day trading mind is a concept worth exploring. You've heard of books, such as "The Inner Game of Tennis". Although I have not read that book, I'm sure the concept is the same as the one I want to discuss here. And the basic idea is this: after you have gathered your trading team and practiced your strategies, you are still left with one foe to conquer - and that is yourself.
It is a fact that, as a day trader, you will come face to face with your own demons. If you have a tendency to be sloppy, then it will show up in your trading. If you tend to enjoy the thrill of risk, then you will take on too much risk in your trading. No matter how knowledgeable you may be as a trader, if you cannot develop a disciplined day trading mind, then you will not succeed as a day trader.
Let me mention a few types of day traders. You will have to examine yourself to see how they fit with you.
First up...the maverick. The maverick is the wild man who rides into town and just starts buying everything in sight. This is the full-throttle personality who figures they can plow their way through any adversity. "If you can't get around it, then go right through it" is their approach to life. As I work with other traders, I see this trait sometimes in those who have been entrepreneurs in their previous careers. Their bull dog approach worked well for them in the business world, and so they carry this over into their trading. What is needed by the maverick may be hard to come by, and that is a more methodical approach to trading. The day trading mind does not bull-doze its way to profits. It may work in other businesses, but it won't work here.
Next up...the gambler. The gambler believes that all of his equity must be used on every single trade. He/she leaves nothing in reserve. It's an all-or-nothing gambling mentality. Risk is a thing that is relished, even beyond the trader's Profit and Loss statement. The problem for the gambler is that he gets an adrenaline rush from trading. It doesn't matter if he wins or loses. He just likes the rush of the ticker tape. The gambler rarely keeps records of wins and losses.
Third...the "poor me" personality. This day trading mind is
afflicted by a poverty mentality. Since this trader has never been
wealthy, he sells his trades too quickly because he just can't believe
he's making money. Since he's never had money, he's not used to money.
And he gets nervous and cuts himself short when he starts to make it. It's easy for this personality type to evolve after the trader has sustained major losses in his account. He become overly protective and cautious, even timid in his approach to trading. What is needed, of course, is a balanced view of risk and the discipline to enter and exit trades at the appropriate times.
Fourth...the ostrich. The ostrich is known for hiding his head in the sand and ignoring reality. The ostrich day trader will brag about his good trades to family members and friends. But he will ignore the bad trades or fail to report them as well. Since the ostrich doesn't keep records, he may not even be aware of how much he is losing. She just continues to trade and hope for the best.
Fifth...the blamer. The blamer is the trader who does not take responsibility for his own traders. When he loses money, it's often someone's fault other than his own. He spends a lot of time being angry because someone or something is always screwing up. The usual targets of this anger: the market, other traders who are trading opposite his chosen direction for the trade in which he's losing money, a chat room leader or member, his wife, his broker, his internet connection, his trading platform, etc. The reality is that that trading involves risk and anything can happen at any time. One sign of progress as a trader is when you recognize that you are responsible for all of your trade decisions. If you lost money on a trade, it is because of something you did or failed to do. That's the harsh reality of trading. And, for people who are used to blaming others for their own short comings, then this can be a difficult truth to embrace.
Now, you may find yourself in more than one of these
descriptions. You may need to make a new category for yourself, based
on your personality. The key thing is this...learn to listen to your
mind's chatter, and know what parts to ignore and which words are the
wise words of caution. We cannot ignore the emotions that often hijack our trading. But we can learn to focus on the process of making disciplined trading decisions rather than being ruled by those emotions.
As day traders, we battle the extremes of fear
and greed and we are never right 100% of the time. It is a difficult
game for someone who seeks perfection. But, you can learn a lot about
yourself, if you will just pay attention. And by paying attention, you
can develop the day trading mind that is wise, disciplined, strong, and
An excellent book regarding the day trading mind can be found in this book review of Trade Mindfully. Click here to read my review as well as a few excerpts from that book.
Since a key component of the day trading mind is having a sound strategy, you can click on this link to find more information about strategy.