When we first start out trading it’s all about finding that trading strategy that will give us daily / weekly / monthly positive returns, the holy grail in other words. It’s all about instant gratification and unrealistic expectations. This can cause us to take risky trades, being greedy and all the other problems that come with being a newbie trader. Slow and steady is a much better approach to trading in my experience. This post is about how trading with a long – term mindset can help traders improve their trading.
Putting things into perspective with long – term thinking:
Trading is a probabilities game. This means that in order for a traders’ strategy’s edge to play out, a big enough number / sample of trades have to be taken (assuming he / she sticks to the strategy and it has an edge). This means that just a couple of trades is not enough to prove a trading strategy; one trade is not your strategy, whether it’s a win or a loss. One loss shouldn’t rattle you, make you want to change your strategy, or make you angry for example; it’s only one trade, there are many more to come. That’s thinking with a long – term perspective.
Traders also start different practices to improve their trading. Let’s say a trader decides to start journaling and review his / her trades. But just because he / she started yesterday doesn’t mean that their trading results will improve tomorrow. Journaling and reviewing trades is a tool that can improve trading over time, and if traders can realize this, they will be better inclined to stick with it. That’s thinking with a long – term perspective.
How will I feel about this loss a year from now? How will I feel about this losing streak 2 years from now? Try framing present events like that to put their current impact on you into perspective.
Other ways / areas where long – term thinking can help your trading:
If you think long – term:
- Backtesting shouldn’t be an issue.
- Mistakes should be seen as stepping stones. As long as they are rectified and learnt from, it will pay off over time.
- Overtrading shouldn’t become an issue.
- Your persistence can improve.
- You should be okay with risking small on any given trade / not be greedy.
- Being more patient should be easier.
- Being more disciplined should be easier.
- Sticking to your trading strategy should be easier.
- The impact of any single trade (win or loss) should have a smaller impact on your emotions. You should be able to manage your emotions better.
- Fear of missing out (FOMO) / chasing trades should become less of a problem.
- You should give practices that can improve your trading enough time to reveal it’s benefits. Think along the lines of mindfulness, journaling and reviewing trades.
Final thoughts:
Long – term thinking won’t improve your trading overnight. It’s a thought process to put present events into perspective, to help you be more patient in terms of chasing / getting results. It’s another tool that can help with your trading. It’s about how the negative events are not so bad in the bigger scheme of things, provided that you keep working on yourself / your trading. It’s about how implementing and keeping up with good practices and processes will benefit you in the long run even though it might not seem that way in the present.
Thank you so much for reading. Hope you are well and safe.
Thanks and Regards,
Trading SOS SOS