Your Belief System is Your Trading System


Moves in markets are a result of mass psychology. We make money in the markets by being masters of human psychology and supply and demand. It is well known that trading is 90% mental. Winning in the markets is more defined by your mental make-up than your trading style. What is more important than chart reading is to first understand how people think. Instead of focusing on changing our actions if you’re having issues with trading, it’s time to notice where those actions come from. Moving backward, one step at a time, actions stem from behavioral patterns, and behavioral patterns stem from beliefs. So, it’s at the level of beliefs that decisions are made, and moreover, where your ability to differentiate reality from illusion lie. It’s time to start considering where your beliefs about what works and what doesn’t in trading come from. In life, which includes trading and investing, most of us tend to repeat the same processes over and over, expecting a different result. Over my many years in the business of trading, there are some very clear differences between the consistently profitable trader and the consistent losing trader.

The Novice Trader

1.They tend to follow the crowd.

Watch what others are doing

Comfort in numbers

2.They avoid taking risk unless others are sharing the risk as well.

3.They feel that if others are buying then it is "ok" for them to buy, too.

4.They act on the advice of so called "experts", i.e. the advice of market gurus, CNBC, analysts, and their brokers.

5.As humans, they tend to complicate the trading process and ignore the important simplicity of markets.

6.They always make the same two mistakes: They buy and sell after a move in price is well underway (late and high risk) and they buy into resistance and sell into support (low probability).

The Consistently Profitable Trader

1.They lead the herd.

2.They tune out all the subjective noise that can get in the way of making proper trading decisions. They don’t care what others are doing and make decisions based on a very mechanical and unemotional set of criteria based solely on the laws and principles of supply and demand.

3.They learn to identify the proper entry that most people never see.

4.They buy after a period of selling and into support. They buy fear.

5.They sell after a period of buying and into resistance. They sell greed.

6.Successful traders:

Can identify opportunity before others.

Execute trading plans mechanically.

Successful Trading

1) Having the ability to find two sets of ill-informed individuals in the markets in any time frame.

Those willing to sell their stock or futures to you at a price you know is too cheap. You know by objectively assessing supply and demand.

Those willing to buy your stock or futures at a price that you know is too expensive. You know by objectively assessing supply and demand.

2) Having the tools, knowledge, and ability to take the proper action when these two groups appear.

3) Play the bandwagon correctly…

Proper trading is knowing how other market participants think and react when they are correct and, more importantly, when they are wrong. Price patterns are thought patterns.

Mental Musts

1)Confidence

2)Discipline

3)Patience

How to get these

1) Reduce and eliminate subjective analysis.

2) Learn to fight the urge to do what others are doing and make decisions based on a very mechanical and unemotional set of rules and criteria.

The Proper Entry

Know Where To Enter, Support and Resistance.

- Smart money enters here.

Entry Must Be Low Risk.

- Most important part of the trade.

Enter Before Others.

- This is how we get paid.

One of the most important things to understand about proper trading and investing is that visible confirmation and opportunity are completely inversely related in trading. In class, this is a point I focus on more than any other.

Editors’ Picks

EUR/USD holds gains around 1.1800 amid renewed USD selling

EUR/USD holds gains around 1.1800 amid renewed USD selling

EUR/USD regains positive traction and holds around 1.1800 in the European session, reversing the previous day's modest losses. The pair's uptick is sponsored by the emergence of fresh US Dollar selling, which remains induced by persistent trade-related uncertainties. 

GBP/USD strengthens above 1.3500 on softer US Dollar

GBP/USD strengthens above 1.3500 on softer US Dollar

GBP/USD is posting moderate gains above 1.3500 in European trading on Wednesday. The pair appreciates as the US Dollar meets fresh supply following US President Donald Trump’s first State of the Union address and amid looming tariff uncertainty. 

USD/JPY Price Forecast: Bulls await move beyond 156.00 amid constructive technical setup

USD/JPY Price Forecast: Bulls await move beyond 156.00 amid constructive technical setup

USD/JPY attracts some dip-buyers on Wednesday and seems poised to appreciate further. Delayed BoJ rate cut bets undermine the JPY and offset a weaker USD, supporting the pair. The technical setup also favors bullish traders and backs the case for further appreciation.


Editors’ Picks

EUR/USD holds gains around 1.1800 amid renewed USD selling

EUR/USD holds gains around 1.1800 amid renewed USD selling

EUR/USD regains positive traction and holds around 1.1800 in the European session, reversing the previous day's modest losses. The pair's uptick is sponsored by the emergence of fresh US Dollar selling, which remains induced by persistent trade-related uncertainties. 

GBP/USD strengthens above 1.3500 on softer US Dollar

GBP/USD strengthens above 1.3500 on softer US Dollar

GBP/USD is posting moderate gains above 1.3500 in European trading on Wednesday. The pair appreciates as the US Dollar meets fresh supply following US President Donald Trump’s first State of the Union address and amid looming tariff uncertainty. 

Gold eyes monthly top above $5,200 amid geopolitics, trade jitters

Gold eyes monthly top above $5,200 amid geopolitics, trade jitters

Gold buyers are back in the game, eyeing $5,200 and beyonf on Wednesday after seeing a correction from monthly highs on Tuesday. The US Dollar slips after Trump’s SOTU fails to impress and as AI-driven worries ease. Dovish Fed bets also weigh.  Gold looks north so long as the key 61.8% Fibo resistance at $5,142 holds on the daily chart.

Bitcoin, Ethereum and Ripple post cautious recovery amid downside risks

Bitcoin, Ethereum and Ripple post cautious recovery amid downside risks

Bitcoin, Ethereum, and Ripple are posting a cautious recovery on Wednesday following a market correction earlier this week.  BTC is approaching a key breakdown level, while ETH and XRP are rebounding from crucial support levels.

Nvidia remains at the heart of the AI boom

Nvidia remains at the heart of the AI boom

Nvidia remains at the heart of the AI boom, with Q4 revenue projected near $65.6–66.1 billion, nearly 70% higher year-over-year. But investors are watching cash flow, leverage, and broader AI adoption. Growth is strong, but the AI stress isn’t over.

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