How Top Traders Think

"You cannot be a successful trader if you are not willing to have both profits and losses. “It's like only wanting to breathe in and not wanting to breathe out.” Both are a significant part of the trading process… The other half of the equation is also important (and equally puzzling). You can't put too much importance in gains. People who value profits too highly, tend to take them quickly. Why? Because if they don't take them, they are afraid they will get away." -Dr. Van K. Tharp-

Top traders believe in their trading systems (systems that have positive expectancy) and their own ability to remain calm whatever happens on the market. They know that trading is a game of probabilities.

They know that all trading strategies in the world would have periods of losses each, and therefore survival is all about limiting your risk and giving away as little portion of a trading portfolio as possible. Whenever a strategy experiences a drawdown, they know it's just part of the game  for the strategy would recover in due course. It's only a matter of time. They know that they don't need to expect every trade they take to win: what they need to do is trading according to their entry criteria and managing each trade according to their predefined rules. They don't ignore a trading signal merely out of fear, nor do they increase their risk because of overconfidence. Their main goal is to be more effective in trading, not struggling to force out higher hit rates.

Dr. Van, quoted above, says further: "Most people" want to be right all the time. They want to make money on every trade. Yet that will not happen because losses are a part of the trading process. When you understand the relationship, however, you can come to terms with losses and make them okay. A natural part of the trading process is to have a point at which you must unload a position or trade at a loss in order to preserve your capital. Those losses will happen to most people about half of the time or more. And you must make them okay or neutral. If a loss is not okay, you will not take it. When you're not willing to take a loss, it usually gets a little bigger. When it rains, it pours. As a result, it becomes even harder to take much more painful. If you didn't take it the first time, as it becomes bigger you will be even less likely to take it. What's likely to happen? It probably will become even bigger. The cycle typically continues until the loss becomes so big that you have to take it. This typically occurs when you get a margin call from your broker!!!

For certain people, it may take many years to develop a normal trading mindset; for others, they speed up their personal evolution as traders and survive their learning curve more quickly than imagined. If you can cultivate the kind of the mindset discussed here, you'll soon see the seed of trading genius germinating within you.

"Accurately gauge your trading skills and trade accordingly. If you’re a master trader, then it’s important to trust your instincts. But if you are a novice trader, it’s prudent to be a little more cautious. Don’t trade beyond your skill level. Realize that you may not have the experience to trust your instincts unconditionally. Trading takes experience and practice, and until you reach the status of a master trader, manage your risk, take it easy, and hone your trading skills". - Joe Ross-
*Tomado de: http://www.ibtimes.com