Day Traders : How to develop PROBABILISTIC Mindset ?

By | March 30, 2018

Day Traders : How to develop PROBABILISTIC Mindset ?

What is mean by PROBABILISTIC Mindset ?
Why to develop PROBABILISTIC Mindset ?
What is main obstacle in developing PROBABILISTIC Mindset?
How to develop PROBABILISTIC mindset ?

What is mean by PROBABILISTIC Mindset ?
     Trading is not Game of Perfection…..Trading is Game of PROBABILITY….
    
     Probability means outcome of event is not confirmed or guaranteed on event-on-event basis.But outcome can be predicted over series of event basis.

    First understand simple example of probable event i.e. coin toss. Outcome of event of coin toss is either head or tails. In outcome two possibilities are possible – either head will come or tails will come.But you will never know with certainty – what the outcome will be on that particular event?

   Same logic is applicable to trading event. Outcome of any trade can either be profit or loss. In any single trade you can’t predict with 100% certainty – what the outcome will be ?
 
   But once you properly backtested and forward tested trading strategy , then on percentage basis over series of trades you can predict outcome. Suppose your trading strategy has success rate of 70% , then over series of 10 trades , 7 is going to be profitable trades and 3 is going to be loss trades. There will be random distribution between profit and loss trades…..

Why to develop PROBABILISTIC Mindset ?
    Many of novice traders , after learning intra day trading strategy , Backtest it , forward test it – and they get profitable result….but once they start to do LIVE trading on their hard earned real money , they will not able to follow that profitable and proven trading strategy.

   Intellectually they understand that – Trading is game of probability , But at functional level , They are not able to accept loss trades because of emotional immaturity.

   Intellectual understanding and emotional acceptance at functional level are two different concepts. You have to master both to become professional day trader and to do trading for living.

What is main obstacle in developing PROBABILISTIC Mindset?
   The only reason that novice traders not able to develop PROBABILISTIC mindset is theie inherited PERFECTION mindset.

   PERFECTION mindset means simply expecting and accepting  perfect , define and predictable outcome of event with highest possible degree of certainty or guarantee…..

From where you had got PERFECTION mindset :
1.Cultural environment in which we born
2.Educational and social environment in which we bought up
3.Professional environment in which we are working….

    Lets understand How perfection mindset develop inside of us. When we are in schools , our parents , teachers , relatives expect highest marks from us. When we work in our professional career , we want to be at top. This automatically builds PERFECTION mindset inside us. Out minds get naturally wired towards perfection. We gets programmed towards certainty.

  But only CERTAIN thing  in trading is UNCERTAINTY…..

 How to develop PROBABILISTIC mindset ?

    Intellectually you had understand that , in trading there is random distribution between profit and loss trades. But emotionally you are not able to accept it , Only because of PERFECTION mindset.
 
   Our mindset shapes our thoughts. If your mindset is of perfection then automatically almost all your thoughts are about perfection.

  We can use same thoughts to shape our mindset.

   It is close loop cycle….Thoughts create out mindset …..then our mindset shapes our thoughts…..

   You just have to understand how this process works, Once you understand it properly , Then only you will be able to develop PROBABILISTIC mindset. And once you had develop and maintain PROBABILISTIC mindset then only you will be able to TRADE and THINK like professional trader. And once you able to TRADE and THINK like professional trader , then only you will get CONSISTENT result in day trading….i.e. trading for living…..

   To know more about How to develop PROBABILISTIC mindset….Kindly CLICK HERE

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