Think Positive: 11 Signs Your Trading is on the Right Track

We're always thinking about where traders go wrong, mistakes made, and other negatives. It's human nature. But it’s important to remember to pat yourself on the back when things are going well. Today, let's focus on the positive.

We sat down with Dr. Gary Dayton to discuss signs that your trading is on the right track. Dayton, a trading psychologist and active trader since 1999, is president of Peak Psychology, Inc., and author of Trade Mindfully: Achieve Your Optimum Trading Performance with Mindfulness and Cutting-Edge Psychology (Wiley, 2014).

"Knowing where we fall short is important, because that’s where our growth lies. But knowing what’s going right in our trading is the base from which we can build," Dayton says.

Here are 11 signs Dayton says indicate your trading is on the right track:

1. You’ve discovered a trading method that works for you.

"You are no longer seeking the ‘Holy Grail.’ You know that doesn’t exist. You’ve settled on a method and are working to develop a deep understanding of that method and how to use it in all market conditions," Dayton says.

2. You’re proud of your trading strengths.

"You know your strengths are assets. You seek to use and apply them whenever possible. This is what brings in the money and the confidence."

3. You acknowledge your limitations.

"You know your limitations, as well as your strengths. You don’t try to sweep them under the rug. The limitations you can’t change, you avoid. Those limitations you can change, you seek to improve and turn into strengths."

4. The drama is gone from your trading.

"When you have a loss or the market does something unexpected, you no longer act like a drama king or queen. Throwing tantrums, yelling at the market, making revenge trades, hurling your coffee mug across the room, and other forms of exaggerated overreacting are things of the past, thankfully."

5. You accept losses as a part of the trading process.

"Losses offer an opportunity to learn about the market; they shouldn’t be swept under the rug. You know this and accept losses. Sure, they’re painful. They’re supposed to be. But you think of the pain as a signal to do better."

6. You love trading.

"If you don’t, it’s really hard to trade well. You have to love seeing your trades set up, love working your charts at night, even ‘love‘ the losses you take because they give you new information about how to be better. When you love the game—all aspects of it—you become immersed in the game, and you know you’ve found your home."

8. You stand (and trade) apart from the crowd.

"When you can do this, you will be selling into frenzied buying and buying into panicked selling. The very best traders are independent of the herd. They rely on their skills, not on what others are doing."

9. You know when to be patient and not rush the trade.

"Trades take time to set up. The confident trader isn’t worried about missing the trade and isn’t afflicted by 'tickitis'—getting the low or high tick. They pull the trigger when the time is ripe, not before."

10. You let go of losses.

"… After you study them. You learn from the loss, then let it go. In this way the mind isn’t clouded with what’s already happened, but free to turn its attention to the next opportunity."

11. You’re excited about the future.

"There is always opportunity somewhere in the markets. You keep looking forward with anticipation."

Of course, just because you had a good week or a good month in trading doesn't mean you can rest on your laurels. Successful traders say they treat trading like a job, and you always have to keep working to get better.

"The best athletes work hard every day no matter what their level. They always ask their coach, 'How can I get better?' They take what they do well and turn it into excellence; they take their limitations and turn them into assets. The best traders are no different," Dayton concludes.