Better trading mindset

Trader's Mindset

Mar 25

The Indian yogi Sadhguru speaks a lot about how we are products of memory. Disregarding beliefs, it is self-evident that we are largely defined by our memories and should make efforts to be more aware of it. Because if we allow memory to overly define us then we could be limiting ourselves.

For example, imagine if we have two identical traders, A and A’, who can both be great traders. If Trader A has mostly positive experiences early on, by random chance, then that individual may be be motivated to put more effort in and thus get even better. Now, if Trader A’ has mostly negative experiences and allows his or her memory to influence future efforts then they become a product of a random sequence of events.

Recently, I made a series of trivial order handling mistakes, that seemed extremely unlikely, and yet did happen and ended causing some larger then desired losses. Each mistake seemed to be perfectly timed to produce the maximum loss. There was a sensible explanation (I was adjusting my orders when I read that market risk increased). I learned what I could from my mistakes but did not extrapolate the results. Because I forgot the results, I was able to go on to take several successful scalps.

While experience can be most valuable, it is also important to be able to discount aspects of one’s experience and to be able to embrace other possibilities.

As a tape reader, it can be easy to get too involved in the trading. What seems to help me is to keep one part of my mind engaged in market cognition and another disengaged. The disengaged part executes in an unbiased fashion.

About the Author

The author is passionate about markets. He has developed top ranked futures strategies. His core focus is (1) applying machine learning and developing systematic strategies, and (2) solving the toughest problems of discretionary trading by applying quantitative tools, machine learning, and performance discipline. You can contact the author at