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Different Mental States of a Trader & Why is it Essential to Control Them?



A winning attitude can only be developed in your mind. It consists of beliefs, mental states, and mental strategies. In the previous psychology series, we discussed attitudes and general beliefs. If you do not know their role in making our mental state, we suggest you refer the articles and get a thorough understanding of it. In this article, we will learn in-depth about individual mental state contributors.


Beliefs are mental filters. They summarise all the information that you take in daily. From having beliefs, you generalise a concept. You also consider information that fulfils the generalised statement and tend to neglect the information which does not support the statement. Under beliefs, information is filtered and modified in a way that it fits into derived generalisation. Thus, beliefs produce their own predictions.

If your belief says that you are doubtful and fearful about your performance in the market, your approach towards the market changes. This change will only bring consecutive losses.

Mental strategies

The order in which your thoughts are structured is known as mental strategy. They are the basis for decision making. You can think of mental strategy as a recipe. The order in which you put the ingredients is critical for making a perfect dish. A trading system gives you signal to as to what to do. This signal is usually a visual one. Your decision-making process will not allow you to take action based on visual signals. Everyone takes action based on feelings. Thus, the strategy that your mind adapts can be summarised in three simple steps. The first step is you “see the signal”, “recognise the pattern” and “feel good about it”. Now you act on this feeling.

Mental states

The critical aspect of success is a mental resource. All these together make up mental states of your mind. Some of the examples of mental states are confidence, anger and fear. Some mental states can support you while some can hinder you. Mental feelings like confidence and alertness can support you, while fear and anger can hinder success.

Winners learn to automatically adopt winning mental states when they are going through adverse situations. Losers, on the other hand, have no choice since the loss puts them in a state of mind that does not support success. Discipline is one of the methods of having control over your mind. Controlling your state of mind is important. It can be easy, difficult, or impossible, depending on how you approach it.

Essential states of mind

You need to have control over your mind if you want to succeed. One’s state of mind can focus on three areas: having, doing or being. You need to focus on these areas if you want to evolve as a trader.


If your focus is on the mental state of ‘having’, you are more concerned about your results and performance. You tend to be greedy. When you want something badly, you start imagining yourself in a situation of not having it. When you think this way, you get into a state of mind that hinders your ability to attain it. Whether you will get it or not is not entirely within your control. When you don’t get it, that can cause anxiety and tension. They interfere in attaining positive mental states, such as concentration and focus. And these are necessary to reach your goal.

If you have set an investment goal, there are chances that you might not be able to achieve it. Thus, you tend to lower your goal less than glorious and don’t make the necessary effort in achieving it. You give excuses for not meeting the goal and not delivering maximum performance.


When you change your focus from ‘having’ to ‘doing’, there is no significant change in result. Factors like the trading system and methods of trading are the main determinants. Any investor always asks the question “How do I do it?” But still, the emphasis is on external results. When any system does not produce the desired result, investors quickly change their methods. This may result in consistent losses.

You can only perform well when you are calm, not when you are under constant pressure and criticism. The part of the body that does most of the work produce senses such as sights, sounds, feelings, tastes, and smells. It does not understand success or failure but only does its job.


The third level of state of mind is ‘being’. Anyone who understands its importance focuses on the internal state of mind. He also knows that ‘state’ of mind is everything. When one’s focus is on ‘being’, one notices what happens. There is no external factor that can affect your judgment. Your perceptions of things change quickly. You start experiencing natural sensations. When it comes to market, every instant of the market has a particular “feel” attached to it. If you train yourself to get that ‘feel’ about the market, market feelings come to you natural to you than to others.

Final words

To become a successful trader, you need to get rid of unproductive mental states and try to maintain the states that are productive. In simple words, you should be aware of your mental states. People who are disciplined will be able to respond to what happens in the market. They are not victims of their mental states. Focus on what is going on within you instead of what is happening around you. When you do this, you will be amazed to see the results.


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