Successful trading isn’t just about strategy—it’s about mindset. One powerful psychological tool you can use is mental contrasting —a process that helps balance optimism with pragmatism.  

In trading, mental contrasting means setting clear, ambitious goals while also anticipating challenges and planning for them. This approach keeps you focused, disciplined, and prepared for inevitable setbacks.  

Mental contrasting involves two key steps:  

1. Visualizing Success (Optimism) – Set specific, ambitious, and realistic trading goals. This could be something like: “I will grow my trading account by 20% this month” or “I will stick to my trading plan without emotional decision-making.”  

2. Identifying Roadblocks (Pragmatism) – Instead of assuming success will come easily, think about potential obstacles and plan how to handle them. Some common challenges include losing streaks, chasing trades (entering late due to FOMO), and technology breakdowns (internet outage, platform glitches). 

The late Dr. Wayne Dyer said, “When you change the way you look at things, the things you look at change.” This is a powerful mindset shift, and it applies to your trading in a big way.

Most new traders approach the market with rigid beliefs from life’s lessons that don’t apply to trading the markets — like fearing losses, wanting to be right all the time, and making decisions without adequate input. But when you change your perspective, you start to see opportunities you were blind to before.

Instead of fearing losses, you start viewing them as part of the game—just the cost of doing business. This allows you to cut losers quickly and let winners run.

Many traders fixate on being right, but when you shift your focus to risk-reward ratios, you start thinking in terms of probabilities, not emotions.

If you’re buying stocks based on looking at one price chart, shifting to a rule-based strategy that explores several time frame charts will change how you see opportunities.

Here’s how ...

Pre-Paying

Before online retailing we went to a brick-and-mortar store. We saw, touched, used and/or fitted the merchandise. Then we decided and paid. Very safe, the sequence of paying afterward. 

I recall the first time I wanted to buy shoes online. It was a hard decision. I wanted to try them on, feel the fit, and not have the hassle of shipping them back for a refund. Eventually I gave in and judging by the growth of online retailing, most everyone did too. 

If you’re comfortable now with buying from an online retailer, you are one step closer to being an unemotional trader. 

Think about trading this way: The price you’re paying to enter a trade is your pre-determined stop loss. That’s the most the trade will cost you. The “merchandise” you’re expecting is the profit target(s). Pay a fixed amount in advance, receive an unknown amount back. 

Imagine you’re writing a check to Mr. Market when you enter your trades. If you have this mindset that the "check" was cashed and out of yo...

Imagine starting in trading without any historical information. No price charts. No patterns to study. No economic information. No annual reports. What would you use to determine if it was time to buy or sell? 

Thankfully, we needn’t dwell on that question at all. We have incredible historical information available that we can research for potential edge in our trading. But the fact is that historical information is not a perfect predictor of the future. We can’t control the market. 

The future we can control is our behavior. The result of every new day, every new trade is mostly controlled by how we behave. Were we disciplined following our rules? Were we emotional about wins and losses? Were we prepared? Were we curious about improvements? 

While we depend on historical data to give us an edge, that edge is only as good as how we act in present time. This brings us to the cornerstone of successful trading: self-mastery. In a world where the market’s movements are beyond your contr...

Traders can learn from so many great sources that have nothing to do with trading. Whenever I’m reading any topic unrelated to trading my thoughts often drift to how I could apply the same information to trading. 

If you think about it, trading is more psychological than mathematical. That means your ability to improve your results rests more on improving your behavior than your strategy rules. 

Here’s a great example: Charles Darwin said, “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”

So true in life and in trading!

Reading this quote, agreeing to it, and then doing nothing to systematically apply this truth to your trading would be a shame. 

Here's a suggestion on how to apply Darwin's observation. My friend and colleague Dr. Woody Johnson, author of Secrets of the Peak Performance Trader, encouraged me years ago to start a “thought journal.” Rather than simply documenting trade results and associated data,...

Trading success is more psychological than mathematical. When I first realized this I was disappointed. I like math and wanted to find my success in formulas, indicators, and statistics. These are all valid tools for finding edge, but that edge won’t translate into positive performance until you get your head right. 

I’m intrigued by the number of biases we might have that hinder our success. Here’s a look at some less obvious biases that interrelate. 

Narrative Fallacy: This occurs when you create or believe in simplistic stories to explain market behaviors, even if the data doesn’t support those stories.

For example, you may believe  a market “story”—such as “Tech stocks always lead the market”—and ignore data that contradicts it. This can lead to biased decision-making, missed opportunities, and unnecessary losses. 

This is an easy one to catch yourself with. Anecdotal stories are obvious!

Here’s the fix: Focus on data. Prioritize quantitative analysis over storytelling. Play D...

Trading Lessons from A Road Less Traveled 

In this 4-part series we'll explore why traders need more than technical analysis and market strategies—they need emotional resilience.

We’ll use ideas from the bestseller A Road Less Traveled by M. Scott Peck, to find ways how traders can achieve mental discipline, personal growth, and manage their emotions for long-term success in the markets. If you missed yesterday's article you can find it here. 

4. Balancing Rationality and Emotion: Emotional Awareness in Trading

"Mental health is an ongoing process of dedication to reality at all costs." – M. Scott Peck

Peck emphasizes the need to face reality with honesty. Traders must acknowledge their emotions without allowing them to dictate actions. Fear, greed, and euphoria are natural, but successful traders recognize these feelings but respond rationally.

Tips:

• Practice Mindfulness: Regularly check in with your emotional state before, during, and after trades. Are you in present time or...

Trading Lessons from A Road Less Traveled 

In this 4-part series we'll explore why traders need more than technical analysis and market strategies—they need emotional resilience.

We’ll use ideas from the bestseller A Road Less Traveled by M. Scott Peck, to find ways how traders can achieve mental discipline, personal growth, and manage their emotions for long-term success in the markets. If you missed yesterday's article you can find it here. 

3. Delaying Gratification: The Patience to Wait for Profitable Trades

"Delaying gratification is a process of scheduling the pain and pleasure of life in such a way as to enhance the pleasure by meeting and experiencing the pain first and getting it over with." – M. Scott Peck

Many traders struggle with the urge for instant results (especially yours truly). This impatience leads to overtrading, revenge trading, and abandoning strategies prematurely. Peck’s concept of delaying gratification teaches traders to endure short-term discomfort fo...

Happy New Year! The next blog is part of a multi-part process to tune up your trading plan for the coming year. If you haven’t read the prior seven posts, you can find them here. 

Brokerage risk is rare but real. Ask anyone who had money with FTX. Keeping your trading accounts with reputable brand name brokers regulated in the USA is the safest decision. If you’re comfortable with offshore and unregulated brokers then start with a very small account and regularly take money out of it. That should give you some comfort that you’ll get your money when you want it, but it won’t guarantee that when you want a large distribution you’ll get it. 

Market risk is unavoidable. Major catalysts happen with no notice. Think about the reaction to the pandemic. Your best protection against market risk is a personal financial plan that is diversified among uncorrelated assets. Stocks, bonds, precious metals, real estate, cryptos, art, etc. Your best protection is having multiple income streams from ...

Yesterday’s results: No trades suggested.

Today’s Best S&P Futures Turning Points: Buy 6098.25 stop 6094.25. Short 6095.00 stop 6099.00 if price retraces up from below. 

The World Index: (+100/-100) lifts from -29 to -14 with sentiment mixed on low volatility. 

Catalysts: Retail Sales @ 8:30. Capacity Utilization & Industrial Production @ 9:15. Housing Market Index @ 10:00. 20-Year Bond Auction @ 13:00. 

Quick Tip: What’s Harder? 

Think for a moment before you answer this question. Do you find it harder to take a loss or a profit? 

The answer says a lot about your trade plan, style, trading psychology, and what you need to work on. 

If your answer was a loss, then your risk management plan needs help. You might be trading the wrong strategy, possibly one with more losers than you can accept or large losers. 

If your answer was a profit, then your risk management is fine, but your open trade management needs work. You might suffer from FOMO. 

If your answer was neither. You’ve ...