FX, Tips, Trading Education

How Understanding Your Emotions and Mind Can Help You Become a Trader. [Part 2 out of 2]

How to properly handle a loss 

In addition to our emotions, we as traders must also allocate a great deal of time and energy to our psyches, so we can avoid letting the market get the best of our minds. The two main components to improving our minds are learning how to lose and having a growth mindset. In life winning is easy. After a win we become overjoyed and happy over our success. Furthermore, even when we get lucky and win in a situation where we should not have come out on top we still feel the same joy as if we were supposed to win in the first place.

On the other hand losing is difficult and can be extremely mentally taxing. After a loss it is easy to feel down and blue. Even if we train, practice, and work extremely hard to succeed in a situation we still may lose which can lead to a drop in self-confidence. In the sport of trading there are both winners and losers, but the best traders learn to not view trades through the narrow lens of success or defeat. Instead, they focus on why a trade played out the way it did rather than the final outcome.

This gets back to the idea previously brought up about not focusing on the money involved in trading. If we as traders begin to celebrate a win and stress over a loss we start to focus too much on the final outcome of a trade and not the steps we took to get to that outcome.

By flipping our perspective to not focus on what occurred and instead focus on the how and why something happened, we as traders can all reach our own personal goals within the industry. 

Additionally, at the end of day we must always remember that trading is extremely competitive and even the best traders in the world lose on their financial bets and make mistakes. We need to come to understand and be comfortable with the fact that the trades we make are not always going to play out as we predicted. The market can be extremely random, and it is impossible for anyone to forecast when it will be up and when it will be down. So, what can we do to control our emotions when dealt a losing hand? First and foremost, we should never hang our heads low after a loss.

Additionally, you must be disciplined and work hard in your preparation for trading, so at the end of the day you can look yourself in the mirror and say that “I did the best I could today and I’m going to work even harder to do better tomorrow.” This can be a difficult feeling to reach, and I believe a major step in not letting a loss drag you down is reflection. As mentioned above with controlling your emotions throughout the trading day, a reflective period at the end of the day can help you to improve your mental health and ability to roll with the punches the market swings at you.

Reflection can be different for everybody as some people may prefer to meditate before bed, journal, or vent to a close family member or friend, but allowing your mind to look back on your day and assess what went well and what didn’t is crucial for becoming a successful, profitable trader.

Having a growth mindset when it comes to trading

Next, to improve your mind as a trader you should focus on having a growth mindset. In the world of trading, having a growth mindset not only means setting large goals for the future, but also creating a plan of action for how you are going to achieve those goals. In addition, the goals you set for yourself need to be specific and measurable so you can easily track your progress. This will help to train your mind to attack difficult problems in small, incremental steps and help you to handle the losses that come along the way.

Even if you have hit a slump in trading, having a growth mindset will help you as a trader to not scrutinize over the moment and still feel that you are progressing in your career because you are following your own predetermined path to  success. Besides helping you deal with losses, having a growth mindset will greatly improve your confidence as a trader because you will be able to see the progress you are making in your career regardless of the money that you are earning. 

The key steps to become profitable

Overall to become a successful, profitable trader I believe that first you must detach yourself from the monetary aspects of a trade, and not allow yourself to get caught up in the gains and losses of a trade outcome. Additionally, you can’t let your emotions get the best of you and permit your feelings and emotional catalysts to sway you off your trading plan.

As traders, we must be mentally strong and be present in the moment of every trade we make. Some techniques to use to help you keep your emotions out of your trades and not dwell on the monetary gains and losses are first to set aside time in your day to reflect on your trading decisions so you may come to understand why you were successful in some trades and why you may have fallen short in others.

Lastly we must learn to approach trading with a growth mindset and understand that it takes a great deal of time and effort to become a profitable trader. A helpful technique to get there is to set both large, dream-like, goals, and also smaller goals to help track your progress to reaching your aspirations. 


Apart from controlling our emotions, we as traders must also learn to keep a level head in the game of trading. The extremely competitive nature and riskiness of trading stocks and financial securities can easily overwhelm a trader. To avoid letting the market take control of our minds and decision making we as traders must first become comfortable with losing. If we come to understand that not all trades are going to play out as planned we can teach our brains to focus on the steps taken to make a successful vs not successful trade, instead of just the outcome. Additionally, we as traders must also learn to approach our careers with a growth mindset, setting large goals for ourselves to achieve in the future and smaller goals to help us progress to our dreams.

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