Focus on learning, not on earning.

It’s easy to get too focused on Profits/loss, especially when starting out as a trader. Trading is black and white in that you make money on a trade or you don’t. A losing trade is viewed as a failure, something that needs to be fixed, and a winning trade is viewed as a success. All of us want more successes than failures, but trying to trade with this mentality can actually lead to more failures.

The Problem of Seeking Perfect Profits/loss

New traders know (or should know) they are unlikely to win all their trades. Any person can step in at any time with a big buy or sell order and send the price hurtling toward our stop loss. We can’t control that. That is part of trading. Losing trades happen. Yet many traders still view losing trades as a problem that needs to be fixed. That isn’t necessarily the case. You will never have perfect Profits/loss; markets aren’t that orderly. And you don’t need perfect Profits/loss to make a lot of money. Even winning 50% to 60% of your trades can produce monster returns.

Striving for perfect Profits/loss is a fruitless path, which is actually likely to make you over-analyze the market resulting in even poorer performance.

Full-time traders focus on perfection of the process.

Perfection of Process

Profits/loss are actually out of our control to a certain extent. If we have a strategy we follow, we may know that over the last 100 trades we were profitable 63 times (63% win rate). That gives us evidence our strategy works, but we don’t know which trades will be profitable before we take them. We know we will win about 6 trades out of 10, but the market will decide which trades result in a win and which result in a loss, not us.

We can’t control the result of each trade, because if we could we would choose to win all the time. But that is simply not the case. What we can control is our process for trading though.

Your process is everything that goes into making a trade. It starts with how you prepare for the day, what your strategy is, how you specify your entry and exits, your position sizing, how you manage the trades once in them and how you analyze the market to spot your entry and exits.

Your process is a daily routine as well as a routine on each trade. Each trader’s process is a bit different, but successful traders have one.

Focusing on your process or routine keeps you focused on the things you can control. Such as determining whether market conditions look favorable for a trade, and then executing that trade perfectly, according to your trading plan, from start to finish. The result doesn’t matter. If the trade was executed perfectly, consider that a success.​

A trade executed poor that Profits/loss in a win should be viewed as a failure, regardless of the result, because such an action can result in bad habits which will result in poor or inconsistent performance in the future.

A trade executed well that Profits/loss in a loss are still a good trade. You’re building good habits. 

Anything can happen in a single trade. As discussed above, we may have a good idea of how many trades we will win out of 10 or 100, but we don’t know which trades will be winners or losers when we take them.

Let go of individual trade Profits/loss; they don’t matter. If you focus on a solid process for trading then Profits/loss will come. Think about the big picture, not individual trade Profits/loss.

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