Trading Psychology - Blind Spot in Your Mindset

Hi, Brian McAvoy here with Inside Out Trading. And today we're going to talk about more blind spots. This one has to do with your mindset, which is really critical. Before we get started, make sure that you subscribe to this channel and if you're on YouTube, make sure you go ahead and click the notification bell. Now, of course, in trading, your mindset really affects everything, you know, because that's the attitude, the filters, your whole perspective. It's just, you know, that's what you bring with your trading. And trading is a decision making process. It really is. I mean, it's a, the whole activity is about, you know, taking in information, evaluating it, making decisions and acting on the, on those decisions. So your mindset really influences your decision making tremendously. And one blind spot that really affects traders big time. It's important because one, one challenge with trading is, you know, avoiding getting caught up in individual traits. You know, you're sitting there, you're watching the screen and you're watching the things move and you're watching the next candle form and all this kind of stuff. And, you know, it's just, it can be really, you know, consuming and involving. And to remain detached when you're trading is really critical for good decision making. You know, to be able to sit back and, you know, whatever the markets might do, to remain emotionally detached so that you make good, clear, sound decisions based on your logical thinking and not emotional thinking. Emotional thinking is what causes the regrettable losses. Your mindset, like I said, is huge. One of the big challenges that a lot of traders have is how do you remain detached while you're trading? How can you distance yourself? Because you're in the middle of the trade, you got money riding on this, and yesterday you lost money and you got to get it back. So you have all this stuff that can really just suck you in. And, you know, for good trading purposes, you need to be able to pull back. So how can you do that? Well, this blind spot that I'm talking about really is an awareness. And one thing that a lot of traders forget, and this is why it's a blind spot and it affects you, is it's really important for you to remember that before you ever placed your first trade, you were a business investor. And you chose this business out of the thousands of choices of places and businesses where you could have invested the money that you put into your trading. You could have put that money in a ton of other places. So at that point, you were a business investor. You're saying, okay, I've Got this money, I'm going to put it over here where I can put it to work and make more money. So you're a business investor and you really had literally thousands of choices of other places that you could put your money, but you chose trading. And it really doesn't matter from the perspective of your investment. Lots of good choices for you, places for you to invest your money, the very profitable things you could have invested in, but you chose trading. And it's really important that from a mindset standpoint that you keep that in mind, that even while your trades are going on, that you remember you're the investor in this business and you're not just trying to make some money today, you're the investor in the business. You got into this because you wanted to build a long term asset and you want it to work and you want it to work reliably and predictably so that you can have some financial security in it so that you know, you know, next week and next month and you know, three months from now, six months from now, this year you're going to make money. So keeping in mind the perspective that you're the investor in this business and if the business isn't working well, then you need to fix whatever's not working. Not just this trade, but the machine, your business, this is the business that you've invested in. Well, business is a financial machine. It's an organized activity that you systemize so that you get that predictability, that repeatability, that security in knowing what's going, you know what's going to happen. And if the machine isn't working, okay, don't just get bunched up over this one trade or oh my God, the market's moved, or oh, there's another stupid news announcement that's thrown everything off, or oh, it just broke through the resistance point. No, if things aren't working, you have to always remember you're the investor in this business. And if the business isn't working, you need to go fix the business, fix the operation, find out what's not working on a consistent basis, not on a trade by trade basis. But you got to fix the machine. And if the machine's not working, at some point you got to say, hey guys, we need to take a little break here and reevaluate what's going on. Because the machine's not working. It's just sputtering around. It's not reliable. One day we're up, one day we're down and it's kind of a crapshoot or if things are going generally well, all of a sudden things take a turn. You know, it's been working, now it's not working. Okay, let's not focus on the trades or the news or any of that kind of stuff. Let's say let's look at the machine, let's look at the business and same thing. If it goes gangbusters, upside, okay, what did we do that worked and how can we do that again and again and again? How can we make that part of the everyday machine and do it in a knowing basis? But see, really understanding and remembering that this is a business and you're a business investor, not just somebody trying to make money. You're not trying to, you know, make up for the hurt that happened yesterday or you know, again getting caught up in the day to day activities and the experiences of it. But looking at it from that detached standpoint, this is, you know, this is a business that I've invested in and you know, I want it to be a good business. I want it to be organized, I want it to be a long term asset that generates income and wealth for me. And so I'm going to maintain that awareness even when I'm in the individual trades. You keep that in your awareness that regardless of what's going on at the moment, this is a business, this is a long term endeavor. This isn't just today or this week, this is a long term endeavor. And if what's going on isn't working, okay, let's step back and see what we need to go fix from a business perspective and approaching it as a business. This is why venture capitalists, they're thrilled to invest in new businesses or expanding businesses because approach properly, yeah, this is a lot of fun. It's a good long term asset. It's doing all the good things and providing all the good things that you want. But you have to go about it in a sensible, logical, business smart manner. Okay, So I wanted to just bring this up to you because again, it's so easy. From the psychology of trading standpoint, from a mindset standpoint, this is a big blind spot that a lot of traders, you know, they're just sitting there fighting the day to day, you know, it's oh man, I lost money yesterday. And so they're caught up in the day to day and they forget or they become blinded to, they don't see, wait a minute, I'm a business investor. This is a business that I've invested in. If it's not working, I'm going to give it you know, six months or a year and you know, so many thousands of dollars. And if it's not working at that point, then I'm going to stop and decide if I want to continue with this business or go put my money somewhere else. The other aspect of being a business investor is opportunity cost. If you already put three or four or five years into your trading and it's just plain not working, well, maybe it's time for you to stop and say, maybe I should pursue something else. This is a business. This isn't about me and my identity and me as a failure and all that kind of stuff. This is a business. If the business fails, it fails. If it wasn't right for me, that's okay. That's the reality of it and I can accept that. And let's move on to something else. If you want to continue with trading. Okay, let's say, all right, well, let's step back and see if we can approach it differently because the approach that I've been using obviously isn't one that works, at least not for me. So let's step back, see how we can approach things differently. But again, if you can step back and remember that you're a business investor, you're not locked into this, you're not married in it. It's not part of your identity, it's not going to define who you are and whether you're a winner or loser or, you know, hero or failure, any of that kind of stuff. It's a business, that's all it is. And that will help you remain detached. If it's not working, let's see if we can fix it. If we're wrestling with it for a while and it's just something that ain't working. And you know, man, you know, for a certain, you know, it makes sense to invest a certain amount of time and money, but beyond a certain point, it's like, man, I'm kind of wasting my time and money here. So that detachment will help you keep your emotions in check. It'll help you keep a proper perspective on things, things. But again, it's a blind spot. If you lose the awareness of it, you won't see it and you'll get caught up in the day to day stuff that keeps you chasing things and keeps you running around in circles. So keep that in mind. Now we're going to continue these blind spot videos. Hope you enjoy that. And you know, if you found this useful, hopefully, you know, you have, if, you know, if you would, if you think other traders would benefit from it. Share it. You know, subscribe down below because I'm going to be publishing more in this series and of course, on different topics having to do with trading and being a good trading trader, you know, becoming a winning trader. So, you know, go ahead and subscribe if you want to. Anyway, again, I hope this has been helpful. We'll talk to you soon. Cheers.