Just imagine that you have the opportunity to dine with the most successful trader in the world at a lavish restaurant. As you prepare to meet this living legend of the sharemarket, there are many thoughts running through your mind. You know all about the history of this incredibly skilled individual and you are in awe of his outstanding list of accomplishments. Such a unique opportunity! You will no doubt be the envy of your trading friends. What is the first question you would ask?
Take a minute to think about it… don’t rush in… this could perhaps be the most defining moment of your trading career to date.
Generally when presented this scenario, there are three broad types of questions that traders tend to ask. The type of question that they ask tends to define their experience and expertise in the market. Novices to the sharemarket usually ask questions revolving around indicators and entry signals. They seem totally focused on determining the ideal set-up, which will give them confidence to pull the trigger and engage the market. Their questions may include:

• What moving average do you use?
• What is the effect of dividend yield on future share price action?
• What is the calculation of the Stochastic indicator?

These types of queries tend to dominate 90% of the question time of any seminar that I have run. Some never progress beyond this level, even though they may have been trading for years.
Once a trader has moved beyond their fixation with entry, indicators and set-ups, it will dawn on them that money and risk management is a very important concept. How to handle risk, position sizing and setting stop losses then become a focus. Questions may include:

•  How do you set your stop losses?
• Do you handle highly volatile shares differently from the top 20?
• What percentage of your capital do you allocate to each market that you are trading?

Traders asking these types of questions are well on the way to developing a level of professionalism that very few traders achieve. At last these traders have come to the realisation that entry is a minor determinant of a trader’s profitability. The novice refuses to acknowledge this fact and insists on pursuing an area that is almost irrelevant to experienced traders. Evidence such as this suggests that entry decisions and indicator selection have little to do with your ultimate success in the sharemarket.
There is a small but sophisticated group of traders who have moved beyond these two broad categories of questions. These veterans have usually had many years of experience in the market, and come from the school of hard knocks. They have come to realise that an individual’s mindset, and their psychological make-up will be the ultimate determinant of a trader’s success. Questions asked by this group include:

• How do you maintain a sense of detachment from the market?
• How do you handle a windfall profit?
• After you have made a loss, what do you do?

Most professional traders would be able to teach you to trade their system in about two hours. Why then do so few go on to achieve profitable results, even after being taught by some of the best minds of the trading world? It is because the majority of people are not instinctively set up to trade. There are very few naturals in the trading world. Successful traders have had to learn how to trade and how to handle the inevitable losses that will ensue.
Ed Seykota’s achievements rank him as one of the best traders of all time. In times of trading pressure, I find it useful to remember some of Seykota’s wise thoughts; “There are old traders and there are bold traders, but there are very few old, bold traders”. When asked for some of the main contributors towards his success, he states: “I handle losing streaks by trimming down my activity. Trying to trade during a losing streak is emotionally devastating. Trying to play ‘catch up’ is lethal. Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money”. There are two main traits that Seykota looks for to identify the winning trader personality:
1) He/she loves to trade; and
2) He/she loves to win

Those who want to win and lack skill can find someone with skill to help them, but they must have the desire in the first place.
About 95% of traders never seek to improve their overall mindset, and as a result inadvertently deprive themselves of extraordinary profits. These profits are achievable only to the 5% of traders who are prepared to get out of their comfort zone and work on their own innate deficiencies and acknowledge their personal strengths. Your level of financial success will rarely exceed your level of self-development.

Louise Bedford (www.tradinggame.com.au) is a full-time private trader and author of four best-selling books – The Secret of Writing Options, The Secret of Candlestick Charting, Charting Secrets and Trading Secrets. Register on her website to receive a free trading plan template and a 5-part e-course to get you trading like a machine.