Millionaire Trader Mindset

Sep 15, 2021

Vijay Bhambwani, Editor, Fast Profits Daily

In this video, very critical, I'll talk about a critical aspect of trading in the markets: The right trading mindset.

Every professional trader knows that having the right mindset while trading makes all the difference between making profits or losses.

As a trader, your most important tool is your mind. Let's see how the mind makes us win or lose in the markets.

Watch the video and share your thoughts. I love to hear from you.

Hello friends. This is Vijay Bhambwani. I hope you're doing well in the markets and the markets are treating you kindly.

Friends, in this video I want to touch upon a very critical, I would call it a supercritical, aspect of trading in the markets and that too, for professional traders.

I would say that we traders are not only traders, but we are actually brain warriors. We fight, we ideate, we survive, we thrive, we win, we lose with our ideas and therefore, the ideas are our means to an end which is putting food on the table for our family, getting the jam, the bread, butter, jam, and chocolates from the markets.

To that extent, the brain is our primary tool that we employ. Which is why I realised that technical analysis just alone won't do. Which is why I follow behavioural technical analysis, which basically takes into account a 360 degree worldview of the markets and off the technical analysis itself.

In case you agree with me that the mind is the most important part of the equation in trading, let us now see how the mind can be a determinant in making us win, making us lose, and how to react after each event.

The first thing that I realised after I started studying behavioural finance was that after a major victory, which means a major win in trading as well as a major loss in trading, it is very important to take a break, to take a break from trading, which is something that most professional traders find difficult to do because we are so used to the idea of trading. It's like saying I have not gone to work because I have not traded today. So that compulsive trading has to stop.

Why after a major win? It's because after a major will you feel you are God. You think you know at all and possibly you would start taking excessive risks in the market and in your overconfidence, you might just surrender most or maybe even all of your gains.

Why after a major loss? It's because you tend to be down in the dumps and you start to start trading scared. Now, a scared trader cannot be a bold trader and cannot therefore be a good trader, a rational trader rather because every time you make Rs 5,000 per lot, you will be locking in your gains and saying, look, I've just got burned in my previous trade and if I don't take the small money home, even this will go off and because you're scared, chances are that if there's a loss in a trade on a mark to market basis, you might just choose to hold on because your brains freeze, just like a deer freezes in the headlights of a car on the highway. So after a major loss, you should also take a break.

The other thing that I can tell you is form habits of reward and punishment. For example, every time I need something, for example, if you need a new watch and a pair of shoes or you need a new shirt, you need anything, non-critical of course, medicines and food of course don't come in this list but in case you need anything, tell yourself, look, if I need something which is worth X, set a target, only if I achieve this much by way of trading profits, will I reward myself, and that will be like a medal of honour.

As a matter of fact, this shirt that I am wearing is something that I bought with the winnings from a particular trade. So every time you used that thing, for example, every time I wear this shirt, I remember that I had traded and made money in that particular trade. It's like repeating a feel good factor to yourself and the brain gets encouraged to repeat that performance again. So you want to win again.

Similarly punishment. You like perfume and you have had a losing streak. Tell yourself, I am not going to wear this perfume or I am not going away any perfume, till a reverse this losing streak and come back to ground zero or even positive territory. Now that should make you want to work our towards coming back and starting to enjoy what you really like most, wearing perfume. Just an example of course.

Now just as there are stop losses on financial basis, there are stop losses on technical levels, there are stop losses on money management, and monetary losses, there should be stop losses on behavioural financial basis also.

So position sizing. How big of a position should I take? If you take a position that keeps you awake in the night and tells you listen, I can't wait for the morning because the markets will open then and then I will know whether this huge position that I've taken is going to be profitable on not, in short, if it's gone away on your mind, keep you awake in the night, and rob you of your night's sleep, maybe your position size is too big. So as you can see, there is a behavioural aspect to the market as well.

Now, what about a stop loss? If your position is too big, your financial or technical stop loss is not reached, but you're feeling uncomfortable, you can't get sleep in the night again, your mental stop loss has been reached. There after you're venturing out into dangerous territory, where will start making errors of judgement.

Now after you've made an error of judgement or you've lost money, it will take you a while to recover. No two people are alike. So how you recover from a loss making process also determines your future in the financial markets.

People who tend to recover faster will bounce back and then climb higher over the years because they're winning streak comes faster than the guy who takes time to basically recoup from a bout of nervousness.

I don't know about you but every time I'm in a tough situation in a trade, I suddenly lose appetite. I don't feel like eating. I eat food, I swallow it but the only purpose is hey, I wanna keep alive. I want energy to start trading tomorrow and get back in the market and trade better.

There are two kinds of reactions when it comes to mental stress and food and believe me when I tell you this, this is an established scientific study. How a person behaves with food after a stressful event talks a lot about that person.

So there are two kinds of people. One is bulimic, one is anorexic. If you google search it, you will know. So a bulimic person is somebody who eats a lot after getting stressed, and an anorexic person is somebody who basically if he/she has a major psychological upset, will lose a taste for food and basically start to starve himself or herself.

Now what can somebody know from a trader's attribute about bulimic versus anorexic people? Bulimic people can be of two types. One, like me who force themselves to eat because, look, I need to get back in the game. Now this guy is a person who wants to get back in the game, wants to get in early and therefore has a higher probability of recovering.

Now it's not that I was always like this. I cultivated this habit. So your characteristics, your personality is not hard wired. It can be changed behaviourally.

The guy who's anorexic starves himself, goes to bed in the night of course, keeping awake but on an empty stomach, is basically saying hey, I'm feeling so wasted that have lost interest in food, I have lost interest in everything, and I am feeling rarely, rarely blue.

Now this guy is going to take a longer time to bounce back. Which is not to say that he will not bounce back, but he will take time because he's is pulling back, is withdrawing, and he is isolating himself. Now self-isolation is not really a very great thing.

So as you can see that there are mental aspects of trading, the entire mental aspects of trading will take hours and hours of a video to basically discuss about and have a whole lot of exciting attributes about behavioural technical analysis to be discovered,

But suffice it to say that as brain warriors, not just do you need a good internet connection, a good refresh rate trading terminal, a customer friendly broker, and a good amount of capital to trade in the market but you also need a calm, composed, cool, and very well functional mind.

As the old saying goes, It's not the swiftest to whom goes the race. It's not the strongest to whom goes the war, but time and chance catches up with us all. As traders, no matter how long a winning streak you have, at some point in time, you will always encounter loss and how you handle that loss, how you behave after the loss or during the loss, and how you try to fight back or to give up, being either bulimic, eating or by simply starving yourself, will determine what kind of a personality attributes you have and whether you are suited to big ticket trading on not.

And the best part about behavioural attributes is that a timid person can become strong, an angry person can become cool headed. Do you know, I was an extremely, extremely short-tempered teenager? I still am a little angry but with behavioural training, I have managed to calm down myself.

So nothing is cast in stone. The most frightened trader can become a cool headed calm, courageous trader, and the angriest, trigger happy, impulsive trader, can become a very thoughtful a very calculating, and a very calm-headed trader.

Here's to all our collective minds because we are all brain warriors and may we all win the battles that we are fighting in the markets with our minds.

On this cheerful note, I'll bid goodbye to you in this video not before reminding you to click like on this video if you liked what you saw. Subscribe to my YouTube channel if you haven't already done so. Click on the bell icon to receive alerts about fresh videos being put about here.

In the comments section, good, bad or ugly, keep your feedback coming. I welcome everything with open arms and help me reach out to fellow like-minded investors and traders by referring my video to your family and friends.

Thank you for your patience. I wish you have a very profitable day ahead. Till we meet up again in my next, this is Vijay Bhambwani signing off for now. Do take care. Bye.

Warm regards,

Vijay L Bhambwani
Vijay L Bhambwani
Editor, Fast Profits Daily
Equitymaster Agora Research Private Limited (Research Analyst

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