Trader’s mindset series – Cause and effect
A trader’s mindset is the toughest aspect of trading and it comes by from a lot of patience, grit determination, focus, agility and knowledge Of course.
Trading can be made simple but most of us make it difficult for ourselves. Want to know how. Let’s see from an example and open up some common differences that stand out. We will talk of the most common ones and you may end up relating to one of them for sure.
Let’s dive into one feature the OSPL signal to see how it is traded by different traders with different mindsets. Well the rule is the same for all, or to say the least is designed that way.
But why do different traders trade the same signal differently. What causes different traders to trade the same feature differently and its effect?
We will see them by visualizing 4 different trader mindsets, actions and their effect.
To put it in a nutshell OSPL is a signal that opens up a possibility of a trade from the artificial intelligence used. OSPL like many other features open up possibilities and success depends on how we decode them and trade them.
To make the understanding simple let’s take an example of 4 trader mindsets Trader A, B, C and D.
Trader A is someone who trades with a low capital and trades with highly demanding expectations and super exaggerated goals. These exaggerated goals come by high demanding needs (Money), Overconfidence, hope and several other factors the very mindset we need to train the most.
Trader B is someone who trades with a moderate capital and has demanding but achievable goals.
Trader C is someone who trades with a big capital and has high expectations of returns.
Trader D is someone who trades with a big capital, is disciplined and has moderate goals to achieve consistently.
Here’s the trade OSPL signal IN 17272 and OUT 17307. Let’s visualize all did have had the opportunity to go at it at the value displayed by the signal. Price opened at 17256 when the signal came in and moved up to 17280 for the 3 minute candle in which the signal was generated. The price went on to hit a high of 17298 in the next 2-3 candles and back to 17260 in consecutive candles. Positional, it even went lower by 100 points in due course of time.
Effect: Let’s see the outcome and then understand the causes. You may even strike a chord when you read the causes further down.
Trader A initiates the trade at 17272 but starts to panic when the price moves higher. He exits the trade when price 17280. The candle opens again at around the buy price shown in signal at 17273 and Trader A initiates the trade again. The price to his disbelief moves higher and touches a high of 17298 in the subsequent next candle. He squares of his position at 17298 thinking this is not his day. The market is out there to take his money away from him.
Trader B initiates the trade at 17272. He does not panic but adds some more to his position when price reaches 17290. He exits his position at 17265.
Trader C initiates the trade with huge quantity at 17272. Adds more and uses all his capital to add more when price hits 17280. He finally exits his position at 17298 when the high was made and the panic starts to sound.
Trader D is this cool guy who initiates the trade at 17272 with some quantity. Adds more to the position at price 17280, more at 17285, more at 17295. He adds more to the position when price comes back to 17285. Trader D starts to trail the position when price comes below 17280 trails, trails till 17262. He exists with the trailing stop loss hut when price moves back to 17265. Causes: You may already have your reasoning for the above. Let’s dive in. .
Trader A loses in this trade. Why? Panic, high demanding goals, impatience, lack of trust in the system. Trader A loses because he has high demanding goals which eventually drive you away from qualities one needs to embrace if he desires to be a successful trader. The road to success becomes longer and goal further when the need supersedes the process.
Trader B ends the trade with a profit because he followed the system, had moderate goals and achieved them with a cool mind.
Trader C loses. Why? He comes with a big capital but still loses. Why? He loses because he does not follow the system, lacks faith in the process he is following.
Trader D ends the trade with a profit because he trusts the system, followed the process, kept a cool mind. He understands his capabilities, the reality, and options available to him and goes on to achieve the GOAL. A Clear goal to utilize the given opportunity, be disciplined as well as be aggressive when needed helps you stand out.
The opportunity is there for the taking, it is up to you how you want to make the most of the opportunity. The above example clearly indicates that the opportunity provided is the same for all but still some lose and some win. We tend to fail to understand opportunities, limitations we have and carry exaggerated goals in mind to achieve the shortest possible time.
Remember success is a journey not an overnight process. Take it slow and avoid nose dives.
A clear understanding of goals, reality options available to us and the way forward help us in this journey. Understand, Success is not a target we set, it’s a journey we need to travel.
We are ready to be part of a success story, are you?
