The Only Way You Can Afford to Think in 2020
Dear Penny Stock Millionaire,
Yesterday we talked about how necessary it is for a trader to have a growth mindset instead of a fixed mindset. However, you can’t just flip a switch and change how you think. It takes time and intentional action to develop a growth mindset.
So pay attention! Because now I’m sharing tips on how to develop your growth mindset. Make developing a growth mindset on of your New Year’s resolutions.
#1 – Small Gains Add Up Over Time
The first step in developing a growth mindset is building it bit by bit.
It takes time. Consistent successful trades don’t happen overnight. It’s a process.
As with any profession, there’s a learning curve. And yeah, no one really wants to stick the curve. We want results, and we want ‘em now.
But the get-rich-quick fantasy is just that: a fantasy.
So take your time. Work through the steps. Educate yourself.
When you start trading, you usually risk only small amounts of money — losses really are a part of the game. They can teach you valuable lessons.
So you’ll probably see mixed results as a beginner: small losses, small gains. But if you stick with it, you might find consistency and can then work on growing your account.
Once you’ve developed some consistency, next thing you know, you could be prepared for bigger trades. But never trade too big. Stay safe! Remember, Small gains add up over time.
If you know my trading style you already know that I seek small gains. I seek 10%, 20%, maybe 30%, and cut my losses quickly. I don’t want to take big risks.
Sometimes there are penny stocks that go up 50%, 100%, or more. And I miss the full stock run because I take profits quickly.
But, again, I prefer to be consistent with smaller gains and manage my risk.
#2 – Practice, Practice, Practice
What kind of practice? Glad you asked …
I mean studying, trading, and learning with commitment and discipline. It’s a holistic approach toward all aspects of your learning process.
For example, you already know I don’t recommend overtrading.
In fact, I don’t ever recommend that you trade unless you’re 100% prepared and ready to jump in. That means trading only the best patterns.
But you should find a way to be involved in trading every day. I’m not saying “always trade with funds from your trading account.” No way! Some days there won’t be any good patterns or setups, and if you don’t have those important catalysts, then don’t trade! Many of us don’t trade every day. Don’t do it unless you’re certain.
So what do you do then — especially if I’m telling you to be in involved in trading every day? Practice with paper trading. Set a time to study patterns, research the market … whatever works for you and keeps you engaged. Whatever you do, do SOMETHING.
As a trader, you have to learn to trade in different environments …
Bull markets. Bear markets. Periods of low volatility or high volatility.
You’ll also trade different directions, long and short, and different patterns. Be familiar with all of them. Study. Practice.
The more you practice, the faster you can grow your level of trading competence.
And that can potentially lead to growing your trading account — even with step-by-step small gains.
#3 – Observe Your Progress Over Time
When you learn and trade with discipline, you’ll see your progress over time. That can translate into more confidence and better results.
This is a process that reinforces itself. And that’s exactly what a growth mindset is about.
However, to observe your progress, you first need to learn from your own trading — including your losses. This a key step in the process.
Remember that your losses will be some of your best teachers. When you learn from them, you can avoid costly errors and help protect your capital.
A critical turning point is when you learn to turn your losses into gains …
Take a moment to soak that in: At that point, you’ve become a dedicated student who trades only the best opportunities.
From there, keep moving forward.
#4 – Observe the Habits of Successful Traders
Of course you’ll learn from your own trades — but you can also learn from other successful traders.
Why? Successful traders are already getting the results you want for yourself. It just makes sense to learn from them. It can speed up your development.
When you study successful people, you might notice that they share many traits and habits.
The same applies to successful traders. Their habits give them an edge for success in the markets. You need to do the same.
You have to master stock patterns. Set and follow a trading plan. Make time to review your trades and learn from them. Work with a mentor. Learn others’ strategies and develop your own.
#5 – Always Seek More Knowledge
Of all the growth-mindset characteristics, your beliefs and an insatiable appetite for learning are key.
Learning is an ongoing, forever process. I’ll say this over and over: Never stop learning!
Some people say the day you stop learning, you basically die. I follow this credo.
Take everything you learn and let it grow and evolve. Apply that knowledge to different trading scenarios.
Think about multiple outcomes. A pattern you successfully trade today might not work tomorrow. Stocks or sectors with ripe with opportunity today can be barren tomorrow.
And, again, learn from successful traders. They can potentially help you shorten your learning curve. They were once where you are now.
But buyer beware! There are a lot of fakes out there … so be careful when choosing a mentor.
Invest your time in learning from the right people: Successful, legit traders, and students with a growth mindset.
Key Growth Mindset Tips for Traders
There are a few more growth mindset tips I want to share with you …
Use them to help you set a framework and expectations for this process.
Set Up Your Own Trading Rules
Planning and strategy are critical to developing a growth mindset.
You’ve learned here that you have to believe in yourself and also be willing to work hard. But without planning and strategy, you’ll go nowhere fast.
So, when you enter a trade, you’ll execute a predetermined trading plan. Every single trade. Every time.
In that plan, you set your own trading rules: the types of stocks and patterns you’ll trade, the risk/reward ratio, your position size, entry and exit points, etc.
Your plan is your set of rules. It provides structure, and structure can boost confidence. Always trade with a plan — always!
Develop Realistic Expectations
It’s a marathon, not a sprint …
To become a great trader, you have to develop realistic expectations.
Even traders who turned small accounts into huge profits did so it over the course of years — not days, not weeks, not months.
Be willing to work hard and learn from your mistakes. Recognize that solid success can only be built step by step. Have patience, study hard, and trust the process.
The Bottom Line
A growth mindset plays a fundamental role in your trading.
You have to believe you can do better, that you can learn more.
Developing a growth mindset won’t happen overnight. It can take time to strengthen your beliefs. The more you study and practice, the more you’ll help yourself develop your growth mindset — it goes hand in hand.
Seek out mentors and great traders. They’re out there, and many are happy to share their wisdom. No matter where you are, you can find someone who knows your path.
But if you think you can’t succeed, you’re setting yourself up for failure.
Knock it off!
Why live scared? Do whatever it takes to change your life. You can do something amazing. What are you waiting for?
Editor, Penny Stock Millionaires