Do You Have the Right Mindset?
Dear Penny Stock Millionaire,
Today, let’s bust out some cool psychology stuff to help with your trading education. This is gonna be fun.
I’m a big fan of this topic and firmly believe it’s one of the most important things in trading and life in general. Believe and achieve. OK, let’s roll!
In 1988, Dr. Carol S. Dweck, a psychology professor who now teaches at Stanford, published a research paper explaining how people’s beliefs in their own intelligence played a significant role in their motivation, willingness to work hard, and achievements.
In that paper, Dweck concluded that if you believe, you can get smarter — if you believe in your own abilities, you’re willing to put the necessary efforts to learn. Bottom line: When you believe, you achieve.
On the other hand, the same research shows that if you believe you can’t get smarter … if you believe intelligence is a fixed trait you can’t change … then you’ll never achieve your full potential.
So basically, if you don’t have faith in yourself, then you’ll probably achieve much less than you truly can.
Those conclusions brought new light to the understanding of mind and achievements and coined the terms “growth mindset” and “fixed mindset,” which I’ll explain more in this post.
You may find it surprising how much those terms relate to your trading success.
Then let’s look at what a growth mindset is, and if it can really make or break your trading career…
What Is a Growth Mindset?
A growth mindset (or growth mentality) is believing you can develop your talents over time through “hard work, strategies, and input from others” — to use Dr. Dweck’s words.
In stock trading, I’d change those words to “consistent study, a trading plan, and mentorship.”
People with a growth mindset tend to achieve more. They believe they can improve. They recognize success takes hard work. So they’re willing to work for it. They also tend to get better results, which strengthens their beliefs. It’s a cycle that reinforces itself. And if you think about it, it makes sense.
If you believe you’ll learn and be successful in trading — and you’re motivated by the payoff — you’re going to make an effort.
I see this confidence in my great students, those constantly improving their knowledge of patterns and the market. They develop a keen eye for spotting opportunities and there’s no better positive reinforcement than winning.
Let’s talk about the ‘naturals’ — those with innate talent. That raw talent may be impressive, but they gotta work for success, too.
I’ve seen people with the best of abilities fall short because they just won’t work for it or they can’t commit.
And I’ve seen people with average skills find success. Maybe they don’t have ‘superstar’ status. But they make a living, and that counts for plenty.
Here’s the good news for traders: You can help develop your trading skills by adopting a growth mindset.
No catch. You just need to believe in yourself, be willing to work hard, and surround yourself with the right people.
Benefits of Having a Growth Mindset
A growth mindset can make or break your success. Why?
Because to become a successful trader, you’ll have to do things not everyone will do.
You have to study hard, develop the right processes, and keep learning — from your own experiences and from others. Never hesitate to learn from the traders who’ve gone before you.
Trust me, I know these things aren’t always easy! I had to do it myself!
But you have to believe it’s possible. Then you have to put in the effort.
Your beliefs come first: Internalize that trading for a living is a real possibility for you.
After many years of trading and teaching, I realized that the reason most traders lose money in the market is because they lack the commitment to learn. And they don’t believe they can win.
A lot of these traders would rather gamble than dedicate themselves to learning the craft of trading. They chase after ‘hot’ stock tips, rather than work to become self-sufficient in trading.
If you want to be successful in trading, you have to change your mindset. It’s not about getting rich quick. It’s honing a skill — and that takes time and dedication. Period.
Growth Mindset vs. Fixed Mindset
So what’s a fixed mindset? That’s the belief that talents or abilities are innate, static …
Growth and fixed mindsets are completely different mentalities. No kidding, right?
We shouldn’t underestimate innate talent. But in most cases, it plays a minor role in success.
Sure, it’s better to have innate talent, but you won’t get anything out of just having it. You gotta do the work!
Think about this … how many people with great talent waste time and don’t take full advantage of their own abilities? Some might even be considered lost causes.
My point: You can find people with little innate talent who do the work. Their efforts and commitment pay off. They’re competent and successful.
They possess the growth-mindset characteristics their peers lack.
The Bottom Line
In the book “Outliers,” Malcolm Gladwell mentions the 10,000-hour rule. It can take up to 10,000 hours of “deliberate practice” to become world-class in any field.
And good news, people! You don’t have to be a rockstar trader to make money. You just need to be competent enough in trading to hit consistent gains.
Be smarter than the gamblers. Do the work. Learn from others who do the work and have success.
It takes a lot of work and dedication, but before you know it, you’ll start seeing more positive trades than negative ones. Believe in yourself, and believe that you can and will make money in the markets if you apply yourself. Tomorrow I’ll go over exactly how you can develop a growth mindset in regards to your trading, you don’t want to miss it.
Editor, Penny Stock Millionaires