Having a probabilistic mind and approach to trading is one of the hardest skills to master. It goes against our human nature. We're used to having to know what must (or will) happen in any environment to get the outcome we want. If we don't get it, we're able to force new ways to create the results wanted, and usually, we succeed in doing that. To a point where we can replicate the same method used over and over again to succeed in that particular thing. But in trading, that's not possible. We could trade the same strategy that had proved to be profitable for 10 years but still lose money. Which is so damn painful.
But for professional traders (like me) it isn't. Because we understand that every trader influences the market price. Every trader's buy and sell order forms a candle pattern on the chart that starts or ends a trend. For example, if 5 traders take sell trades in a downtrend, and 10 traders take buy trades in that trend, a bullish candle pattern usually shows up. It may signal a short pullback before the continuation of the trend or the end of it. We see these as lower lows and lower highs. Being aware of those price movements allows a trader to adapt to market changes. But that's only possible with a probabilistic mind.
You can start building it by always looking for "what if scenarios" or "IF and Then scenarios." When analyzing the charts, look for 2-3 different ways that the price will use to tell you when to enter and not. Understand how the bulls and bears will behave; not one of them. Then when planning for the trade, write an IF and Then statement that will tell you what to do. For example, if you're looking for a buy trade at a support level, you write: IF the price bounces off the support level with a bullish engulfing candle pattern, THEN I should buy. You can apply the same strategy in situations where you want to tell yourself to sit on your hands.
Once you start applying the IF and THEN strategies, your trading performance will improve. You'll engage with uncertainty flawlessly. Your equity curve will turn from trending down to rallying to the moon. And you'll be much happier and more grateful for being a trader.
But for professional traders (like me) it isn't. Because we understand that every trader influences the market price. Every trader's buy and sell order forms a candle pattern on the chart that starts or ends a trend. For example, if 5 traders take sell trades in a downtrend, and 10 traders take buy trades in that trend, a bullish candle pattern usually shows up. It may signal a short pullback before the continuation of the trend or the end of it. We see these as lower lows and lower highs. Being aware of those price movements allows a trader to adapt to market changes. But that's only possible with a probabilistic mind.
You can start building it by always looking for "what if scenarios" or "IF and Then scenarios." When analyzing the charts, look for 2-3 different ways that the price will use to tell you when to enter and not. Understand how the bulls and bears will behave; not one of them. Then when planning for the trade, write an IF and Then statement that will tell you what to do. For example, if you're looking for a buy trade at a support level, you write: IF the price bounces off the support level with a bullish engulfing candle pattern, THEN I should buy. You can apply the same strategy in situations where you want to tell yourself to sit on your hands.
Once you start applying the IF and THEN strategies, your trading performance will improve. You'll engage with uncertainty flawlessly. Your equity curve will turn from trending down to rallying to the moon. And you'll be much happier and more grateful for being a trader.
