Based on my own experience as well as working with hundreds of traders over the last few years, I have come to the conclusion that there are three major components to making money consistently in the markets. They are:
1) A solid, back-tested Methodology that the trader has confidence will provide an Edge
2) A customized trading Plan that is objective and in alignment with the Edge and the trader FOLLOWS that Plan
3) An Positive, Realistic, and Fearless Mental Approach
All 3 are critical. If you just have one, or two, you will not gain the consistency you are looking for. The key point is that all 3 are not on the same 'level', if you will, for lack of a better term. Let me explain.
The metaphor I came up with to describe this is that of a bicycle. Picture the front tire as the Edge...the back tire as the Plan. Now, you have a wonderful looking bike! However, the 3rd piece, your Mental Approach, is the actual movement or motion of the bike going forward - that is, it is YOU on that bike and providing the energy to propel it forward.
Let me clarify. You can have a beautiful, shiny new bike sitting in your garage, but it does no good unless you get on it and ride it....which is the purpose of a bike. So there is an inter-dependency here. You can have a bike (Method and Plan) but that doesn't mean you are going anywhere. All that means is you own a bike.
However, for you get on and ride that bike (Mental Approach) that means that the bike must exist (Method and Plan). So, if you have a Positive, Realistic and Fearless Mental Approach it follows that you must have a Method that is sound and a Plan that is sound, otherwise you wouldn't have the right Mental Approach! It’s impossible to have the right mental approach without the other 2.
Because anyone with a poor approach can get on a deathtrap for a bike and will be riding off to certain ruin. Better wear your helmet!
Therefore, it is absolutely imperative that building the right Mental Approach is on your 'to do' list. In fact, it should be FRONT AND CENTER. You can work on that in parallel with your Method and Plan, and as you gain experience in the market.
Without a winning attitude and the right Mental Approach one can use the soundest of all methods and still lose money. Why? Because if your Mental Approach is off, you will find a way to mess up even the soundest of investing strategies and plans!
Monitor the attitude of a winner and you will find a level of confidence and certainty that is rock solid. Most people assume that winners are confident and certain because they win. That's not true.
Winners win consistently because they ARE confident and certain. No method, however sound or special, will work for any trader who mentally pictures themselves losing. We must CHOOSE a winner's mindset. We must work on our Trader's Identity.
You can never fail without your permission. You can't feel like a loser or failure without your permission. No one or no trade can make you feel anything. No market maker can make you feel any way.
You decide...most of the time subconsciously...but you DO DECIDE.
All you are experiencing is experience itself and you can choose to call it a loss, a failure, an error, a screw-up.....but let me offer something else…
Why don't you call it a 'stepping stone to trading mastery'? Realize that attaining any goal is simply taking action, monitoring results, then making corrective actions to get you closer to your target.
Be aggressive but not wreckless.
Be confident, but not cocky.
Have a bias, but don't get married to it.
Be fearless, but respect the market.