What is the Mindset of a Trader?

Being a trader is not just about formulating better strategies and performing more extensive analysis, but is also about developing a winning mindset. According to many studies of traders, what separates a winning trader from a losing one:

It’s NOT that winning traders formulate better trading strategies
It’s NOT that winning traders are smarter
It’s NOT that winning traders do better market analysis
What separates a winning trader from a losing trader is their psychological mindset.

Key Characteristics of a Winning Trader

Psychologically, the very best of traders share the same key characteristics, including the following:

They are all comfortable with taking risks. People with very low-risk tolerance, who cannot accept losing trades, are not cut out to be winning traders, since losing trades are simply part of the game of trading. Winning traders are able to emotionally accept the uncertainty that is inherent in trading. Trading is not like investing your money in a savings account with a guaranteed return.
They are capable of quickly adjusting to changing market conditions. They don’t fall in love with, and “marry”, their analysis of a market. If price action indicates that they need to change their view on probable future price movements, they do so without hesitating.

They are disciplined in their trading and can view the market objectively, regardless of how current market action is affecting their account balance.
They don’t give in to being excessively excited about winning trades or excessively despairing about losing trades. Winning traders control their emotions rather than letting their emotions control them.
They make the necessary effort and take the necessary steps to be self-disciplined traders who operate with strict money and risk management rules. Winning traders are not reckless gamblers. They carefully calculate potential risk against potential reward before entering any trade.
One of the most important psychological characteristics of winning traders is the ability to accept (1) risk and (2) the fact that you may well be wrong more often than you are right in initiating trades. Winning traders understand that trade management is actually a more important skill than market analysis. What determines profits and losses is often not so much a matter of how or when you enter a trade, but much more a matter of how you manage a trade once you’re in it.