The secret to long-term trading success is to work at it every day for a long time.
That doesn't sound very insightful or profound, but what is important about this advice is that it requires you to make a constant effort to have the conditions in place that allow you to do that. If you don't have the correct mindset or basic skills in place then you won't be around for very long. You must prepare a solid foundation and maintain it so that you can slog away day after day for years
No matter how good a trader you might be, there will be times when it will feel like you can't do anything right, that the market will never cooperate again and that maybe you should just find a job with a regular paycheck. These periods can last for months and if you are not mentally prepared for it then you will throw in the towel. Every trader experiences these doubts and you must be ready to work through them when they occur.
Trading success requires an optimistic frame of mind. Not optimism that the market will act in a certain way, but optimism that you always will find opportunities eventually that allow you to make money. None of us knows what the market is going to do in the months and years ahead, but we must be absolutely convinced that we will be able to find good trades regardless of what happens. If we just keep plugging away, day after day, there will be success. It won't be simple or easy, but the important thing is that the opportunities and potential are always there.
One of the keys to maintaining an optimistic mindset is to make sure you protect your capital. That is what keeps you in the game while you are going through the rough spots. Capital is our most precious commodity and there must be an intense focus on preserving it. Lack of capital will kill your patience and interfere with the development of the correct mindset.
In the 25 years or so that I have been trading, the thing that helped me the most was not losing much of my capital in the major crashes of 2000 and 2007-2008. That is what has made the biggest difference in my long-term success. Being able to navigate through those periods and still have plenty of capital to trade is what produces exceptional performance.
There is an old saying, "Hope for the best but be prepared for the worst," that is particularly apt for traders. We need to stay optimistic about opportunities but be prepared to run from the market when conditions are poor. It is a tough balancing act for many folks, but it is paramount. If you have a long-term, buy-and-hold mentality, this thinking will be very tough for you at times.
As traders grow successful over the years there is often an inclination to become more pessimistic about the market in general. This is because their focus shifts from becoming rich to staying rich. Pessimism is a better approach for staying rich. When you expect the worst and are extremely cautious, then you won't take on much risk and that is the only way to fully protect capital.
If you want to grow your wealth then you must maintain an optimistic mindset. When you are confident that you will always be able to eventually find a good trade, then you can handle anything the market might do in the short term. We must aspire to be both confident and realistic.
A positive mindset and constant protection and preservation of capital will allow you to stick with trading for many years, and that will lead to success.
