Think Like a Trader – Trader’s Blog

The biggest jump in my trading came when I started thinking like a trader. This important realization was the result of my realization – to think in terms of probabilities.
Thinking about probabilities has done a lot more for me than just analyzing trades. This allowed me to trade with more confidence because I knew the likely statistical outcome of each series of trades.

It is extremely important to look at the markets in terms of probabilities. This will help you understand your advantages and calm your emotions in trading. Instead of looking at my daily or weekly profit/loss, I track my stats in ticks for the last 20 trades.
Every single trade you make is just one of the thousands of trades you make during your trading. If you keep this in mind and limit your risk on each trade, then mentally there is no need to worry about one or two losing trades.

Thinking in terms of probabilities also helps eliminate the emotional risk of trading.
When you train your mind to think this way, the emotional stress and fear of entering a trade is reduced. You care less about the outcome of each individual trade and more about how it fits into a larger statistical set.

The result of each individual trade is random, but the result of a statistical set can create an advantage.

Creating a 3:1 reward to risk ratio (or close to it) allows you to be wrong on 50% of your trades and still make money. It also allows you to account for commissions and slippage in your trading without causing much damage to your profits.

It is very important to make the right trades and stay statistically profitable over the long haul.
This is the state of mind we strive to create throughout trading.

So think like a tradermeans to think in terms of probabilities, determine your edge, trade the same way every time, and make adjustments that match your criteria.
Doing these things (over time) can help develop a level of confidence and consistency in your trading.

Author of articles on trading and investments, which I have been doing for more than 8 years. Even from your phone, you can open a deal, buy shares, build up capital in assets that will bring dividends even when you stop working. You can't just not think about it.

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