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Trading actively for over twenty years, I’m privileged to have seen much more than an average investor, I can spot and tell when a trade will go bust right before it gets executed.
Remarkably, there is something unique about many traders. They mostly have gambled in the time past. Many of them have a gambling background. For instance, I remember years back when I worked on a race track; I staked some of my money on bets for the games. https://www.amazonslots.com/ and the likes were some of my favorite sites to try my luck.
The question that pops up in my mind is…
Why do traders and horse betters have a lot in common?
I think that trading is much more tangible and is also more foreseeable than currencies, stocks, options can’t fall ill neither do they require emotional stimulation and loyalty like horses.
Making a full-time income is open to a few traders, but there are many traders who earn a substantial income from trading. Some make incomes that are enough to sustain them and their families
This is so because the chances of winning as a day-trader far exceed the chances of winning as a horse better. Regrettably, many ex-gamblers stick to a negative thinking pattern which I refer to as “The Gambler’s Mindset”. This mindset refers to a thinking pattern which suggests that, if you buy a lottery or roll a dice, you can suddenly win a fortune.
This negative mindset keeps many traders bound and limits them from getting to their full potential. The get rich quick syndrome is hard to conquer; it sticks to a desperate gambler’s mindset.
The Psychology of Trading with a Gambler’s Mindset
Trading like a gambler is a recipe for failure, you are bound to make mistakes and lose money. You will surely make bad trades and you will look for your money and not find it.
The good part is that there are changes you can make to your mindset today that will transform your trading, most times overnight.
Mindset Shift #1: Don't Chase Trades; Let Them Come to You
Gambling induces a behavioral pattern that makes you want to continue perpetually. When a newbie gambler wins for the first time, he will likely continue hoping the winning spree will last.
Peradventure he loses along the way, he’s likely to continue in an effort to make back the money he lost.
This attitude is not only peculiar to gamblers but traders are guilty of same actions. A first win induces the second win and the next. There’s always the temptation to continue winning trade after trade.
When we lose the second or third trade, we try the fourth to win back the second and the third.
This behavioral attitude is caused by our social conditioning. We always feel that we must work 8am-5pm for 6 days a week before we deserve to earn a decent wage.
This mindset is often carried into trading and then we continue to work hard at trading. We execute trades even when there are no good trades; we just trade for the sake of it. When we get stuck half way, we continue to make foolish decisions that only compound our losses.
Here’s my advice, when you are smart to differentiate a good trade from a bad trade, decide to wait for the good ones to come to you.
One of the most reliable ways to do this is to pick just a few stocks, currencies, options and study them. Over time, you will understand how it works. The stock’s price movement will become clearer to you and you will be able to know when to enter a good trade.
The truth is you don’t need to execute trades daily or weekly to earn a decent income as a trader. Being patient and spotting good trades is the key. It’s a virtue you must develop.
Mindset Shift #2:”A little here a little there” is one of the right principles to trading effectively
Ex-gamblers are eager about winning a jackpot when trading; they assume that one trade will make them for life. Sadly, it doesn’t work that way, you will have to execute scores or even hundreds of trades to really become someone worthy of envy.
Having this in mind, it’s better to save up smaller wins consistently than to wait for the big one that may out rightly be too risky. While at it, you are likely to experience bigger wins. That’s a more realistic and safer strategy.
Mindset Shift #3: You Don't Have to Win Every Trade
It's good to know that losses are part of the game. You’ll have to prepare your mind for it. You should know that you won’t have to win all the time. Fund managers, traders and soft wares lose money even if they are the best.
Finally, it’s your reaction to losses that will determine how far you will go. Either winning or losing, do you stick to your money management strategy?
A single trade doesn’t determine your expertise and endurance; it’s how you react over a series of trades. Wining 5-7 trades out of 10 is an indication that you’re doing well.
Your trading account shows what’s going on in your head. When you discover that your trading account is shrinking, take the time to reflect on your decisions and retrospect.
Then keep these to heart:
These tips will help keep you in check; you will start trading professionally, like a business person, not a gambler.