Trading is a job where the mindset makes a large part of the result and without the right mindset you are out of the game
We hear very often about trading, investments and how you can easily get rich with this job. The only event that foresees a get rich quick is only the large win in the lottery, which however has low probabilities, therefore it is logical that the generation of money from nothing and without effort is statistically improbable and, moreover, a systematic activity like that of trading cannot appeal to luck or chance.
In this sense we must enter into the perspective that the view according to which the trader carries out operations based on his ability to "guess" the direction of the market is practically wrong and that to do this job, we repeat "job", one must start from the right mentality and the correct consideration of what is done in this type of activity in order to make it profitable in the long run. In this sense, let’s dismantle some beliefs about the world of finance and instead let’s see what are the fundamental aspects to start considering this activity as a serious and in some ways very complex job.
Trading is work
Many approach trading with the wrong assumptions, according to which a small capital can magically be transformed into a huge one in a short time. Nothing could be more wrong, since every activity that requires systematic work to generate money, as well as every profession, requires the implementation of a series of behaviors and discipline rules that are not in the least attributable to chance or luck.
We assume that the trader’s job is one of those jobs with the highest degree of specialization in the financial world, a highly requested and well-paid job in the banking world and asset management. So do you think that these highly trained people rely on chance, on luck or are they people who systematically carry out operations in which they always make money?
They are very well prepared professionals, both academically and mentally, very disciplined and strongly focused on very specific objectives and for this reason they are prepared to know what to do in case of error or in emergencies. Basically we’re talking about a professional figure with a precise mindset, a mentality built to do that job, a job that isn’t for everyone.
Obviously, if we talk about characteristics of this kind, the objective of these professionals will not be to make money as a hobby. Moreover, a common objective in all professions is to know well how to manage financial resources within the markets, i.e. to do one’s job as well as possible. Putting it on this level, we see how the perception of the trader as a "gambler", someone who bets everything on a title, is already less and less and a much more "serious" and less exciting figure emerges.
The main goal of a trader
The trader’s ultimate goal is not simply to make money, we repeat that that goal is common to all professions if one wants to survive, but it is to manage the financial resources in the best possible way that he has available to seek the best possible investment. The trader therefore concentrates on managing the risk of the capital he has available, essentially he deals with calculating and evaluating how much risk to associate with an investment, be it short or long term. Obviously, this risk management is not only focused on finding the best investment, but on finding the best opportunity by optimizing the risk of one’s capital, essentially finding the best possible return and avoiding losing capital.
The trader does this job, managing risk with a focus on preserving capital and consolidating it over time so that it can take advantage of compound interest. All this is done by carefully analyzing the markets, calculating possible scenarios and associating the risk of one’s capital with them. The part where the trader carries out the trading operations on the market represents only 10% of the work done because in that situation the trader already knows what to do and how to do it.
This situation where what we see of a professional is only the smallest part of the work, we can associate it with a multitude of professions, from the engineer who sees the construction of a building in a short time after months and months of planning and calculations, as well as a surgeon who operates after years of preparation on textbooks and as a lawyer who, after preparing the case, presents himself before the judge. As you can see, every profession has a certain degree of preparation, sometimes as far as trading is concerned, trading financial instruments is confused as the core of the activity when in reality most of the work is done upstream, before actually operating.
How to develop the right mindset for trading
To develop the right mindset for trading, you need to start from how do you consider trading. If we believe that trading is an activity to be done in spare time, that simple advice is enough to carry it out and that we need someone to tell us what to do, then know that we will not get anywhere and that the results will never come. If you want to make trading a real business, you have to look at it as such and actually start diving into the professional part, have a serious attitude, knowing that what you are doing to increase your capital over the course of the time, study, make mistakes, learn.
Without this type of mentality, or rather, without this type of vision of trading activity, one will never be able to face a training course where there is study, analysis, development of the discipline and achievement of results, therefore starting from changing your vision with respect to this type of work is the first big step to face the right preparation to become traders and obtain results, as in all professions that we know.
Original article published on Money.it Italy 2022-12-06 08:57:00. Original title: Vivere di trading: la mentalità giusta per fare del trading il proprio lavoro
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