Losses Force Changing Your Trading Mindset


Simpler Trading Team

May 18th 2022  .  7 min read

In this article:

  • The market suffers the worst day since the pandemic began
  • Changing the mindset to adapt to a bearish market
  • New strategies, time frames going forward

Any hopes of an extended rally were dashed as the market again gapped down sharply.

The midweek sell-off was spurred by consumer fears and rising costs for companies in the retail sector. Selling was swift, sustained, and cut deep across the market.

The Nasdaq was hit hardest, falling 4.73% to 11,418.15 points on the day. The Dow tumbled to 31,490.07 points to lose 3.57% while the S&P 500 crumbled 4.03% to 3,924.07 points.

How do traders keep it together in this market mayhem?

This is the time for changing your trading mindset from holding out for hope of a return to the past bull run to finding a path forward in a bearish market.

(Check out the free video, above, for insight into trading this changing market.)

Hope won’t change your trading mindset

Start to change your trading mindset with this simple fact – this market is different and hope won’t change this environment.

What can change is how to trade this uncertainty.

Change starts with updating and maintaining an effective and accurate trading plan – and sticking to the plan.

Traders are easily “wooed” by the next “hot” pick on the newswire or a sudden reversal that “nobody wants to miss this.” An unemotional mindset paired with a solid trading plan helps traders avoid going down these rabbit holes and making account-killing mistakes.

Build your plan and adjust your mindset:

  • Clear – Clear out all the “noise” swirling in this trading environment and stick to a systematic approach to trading with a calm, objective focus that doesn’t give in to jolts of emotion.
  • Balance – There is more to life than being a trader. Learn to balance trading within the important areas of life without the journey consuming everything.
  • Mechanics – Anyone in a successful career has the mechanics of that field down pat. Learn the mechanics of trading – technical chart analysis, indicators, strategies, risk management – to build a stronger mindset.

Controlling one’s “inner self” can be treated like a game, but with potentially serious outcomes. Losing this game of mindset can be costly or lead to potential wins in a chaotic market.

Learn to adapt to this market and maintain a mindset focused on learning, applying effective trading strategies, and managing risk in all areas of life and the trading journey.

Can a shift in mindset really work?

One of the team members at Simpler Trading knows how this works. As an example, he shifted his mindset to adapt to the market and boosted his trading account by seven figures in a matter of months (not a typical result for the average trader).

His example of an unemotional view of the market shows how important it is to change your trading mindset and adapt to this market. Even if the wins are smaller, the mindset can grow stronger.

Change time frames to change your mindset

This market has made long-term trades difficult at best and often not even a setup to consider.

Swing traders who want to stay active are learning how day trading – working within shorter time frames – can keep your trading plans in play. This is a clear change in mindset for many traders.

Any shift toward day trading brings up a variety of questions – What is the risk? How do you get started? What are the time frames for day trading?

Day trading, like all trading, has a high degree of risk. Never trade what you aren’t willing to lose.

Getting started requires taking a step back, learning strategies and setups, and practicing before risking capital.

Time frames are a must to learn when day trading.

Start with the daily time frame and work from there. On the daily time frame look for:

  • Has price moved beyond the historical volatility of the asset? The asset could include an index, stock, exchange traded fund (ETF), or futures. Options on most assets are also possible trade setups.
  • Has the daily time frame for a ticker crumbled into a state of confusion or chop? This affects the uptrend or downtrend and clear setups are difficult to identify. Look for clear signals that support movement.

Don’t get emotional about the confusion when day trading. Learn to take advantage of the quick shifts and understand the basic principles that present ways to navigate the market on a shorter cycle.

Why trade alone in this chaos?

Trading requires learning skills and diligent research, and at Simpler Trading we understand the time commitment to trade well. We started the Simpler Free Trading Room to help traders find out more about who we are in the world of trading.

Try the room today and get access to the trading insights and free classes so you don’t have to trade alone.

Preaching trading plans and mindset

At Simpler Trading this question comes up often, “Why do we ‘preach’ about trading plans and mindset?”

Because our team knows the importance of learning from others who have achieved great things before us.

Think about billionaires.

Is their mindset the same as someone working a 9-to-5 job?

A priority for someone wanting to develop or enhance a skill is to learn from someone who has “been there, done that.”

So why not tap into the mindset of a billionaire’s business skills and apply that information to push your potential, shed mental and emotional traps, and target more trading wins?

No one is born a great business person or a trader. It takes work to build skills, including mindset, and it makes sense to avoid harsh lessons by following the example of successful people.

Sir Richard Branson, the pioneering entrepreneur and billionaire, has built hundreds of businesses through his brands. But he didn’t just suddenly become a billionaire. He worked hard over his lifetime and was continually learning and developing new skills.

Just like no one is born a billionaire, no one is born a trader.

Trading is a learned skill.

What can traders learn from Branson’s example?

His focus may be considered simple by others – be comfortable when uncomfortable.

Try going the wrong way up the escalator. This helps with emotions and mindset when learning to become comfortable when life, or the market, is challenging. This is all a conscious effort to go against what is expected.

Where does trading fit into the idea of going against the flow?

Take the example of identifying a trade setup that has a 90% probability of success. Everything looks fine until the company announces a sudden loss in revenue. The stock price reverses, and your trade falls apart.

Be comfortable when trading gets frustrating.

Traders must learn to adapt to the “unknown” factors that can affect market movement.

Learn from Branson who is always asking questions and feels no pressure to follow the crowd.

Business and trading opportunities often happen when someone avoids the crowd by identifying new possibilities.

Why not step outside that comfort zone and create a new path?

Find a trading mentor, plan a different strategy, learn a different trade setup, try a new charting tool, and see what happens. Learn, grow confidence, and push into new areas of the market.

Branson is at the top of the mindset game among entrepreneurs. Traders are essentially entrepreneurs facing the vast, ever-changing frontier of the stock market.

How to find a trading mentor

If you are looking for a trading mentor who has “been there, done that” then consider getting to know more of the team members at Simpler Trading. Each has a unique style and strategy with a focus on reaching financial freedom.

You can get to know our team members through our community of like-minded traders. Gain access to live-trading sessions and real-time stock alerts while learning how professionals operate in this market. Give it a try today.

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