Trading is an activity for which no one is born mentally prepared. I mean that nobody is born knowing how to trade, and what is more, it is not something that is only about technical knowledge, because if the problem were only intellectual and technical knowledge, then learning to trade would be something of the simplest.
Unconventional thinking and conventional thinking
As a general rule, human beings live in a society where we interact and acquire behavior patterns to understand and interact with the people around us and the events that happen to us; but all this learning, all this series of things that we have learned since our birth to be able to function in the society in which we live, is something of little or no value in trading.
The aforementioned is part of conventional thinking, but in trading, as in art, we need to make use mainly of extraconventional thinking, or thinking outside the conventional. The reason for this is very simple, in trading, logical and abstract thinking are summarized in one, in order to understand what is happening in the markets and the best way to react to them. In trading, as traders, we are competing against other people in the task of obtaining greater benefits for ourselves.
In this sense, conventional thinking is not very useful in trading, because as in society, it wants to start from the premise that everyone has good intentions, when in reality, in trading everyone tries to achieve their own benefit by all means possibles.
So, in trading, it does no matter what others think of you, instead, in trading, just matter your analysis, and what you do as consequence from that. And even more, in trading, each trader must forge its own path and destiny, and achieving this will depend on its capacity for understanding and personal vision of the market and asset that it operates, also on the adequate understanding and knowledge of itself at a psychological and personal level.
To Think logically, and think abstractly
Thinking logically involves analyzing the mathematical factors involved in operations at a basic level, such as, for example, if you invest $ 200 in a crypto that is worth $ 100 and that cryptocurrency rises to $ 120 and you sell it, then you will earned $ 40 in such operation.
But in addition, logical thinking leads the trader to understand the fact that it must have entry and exit points when operating the markets, it implies realizing that no one can enter the lowest point of the price, or exit at the highest point of it, because no one is a fortune teller. Logical thinking allows the trader to understand that there is no way to win in 100% of the cases and that there will be many trades that it will lose, no matter how much preparation or knowledge it has.
Logical thinking will make the trader set feasible profit targets in the market, based on scientific rationality, supported by the understanding of technical indicators, chart patterns, supports and resistances, etc, and also supported by the analysis of fundamental factors (such as the news).
On the other hand, abstract thinking allows the trader to "think outside the box", to understand when to modify its vision of things, to understand when things have a different rationality than usual. Thinking abstractly requires the trader to develop a level of personal intuition, which together with its rational logical mentality, allows it to operate in the best possible way, understanding things that for most people (and even many traders) are incomprehensible.
When a trader wins in a situation where most people lost in the markets, it is because it understood something that was not obvious to most others. So, a trader with logical and abstract thinking understands reality at a deeper level, and this allows it to take advantage of it, and profit from the markets even when most people are only losing money on its.
A trader who thinks outside the box, out of the conventional, out of the stablished, understands on great part the technical and psychological factors that lead other traders to trade how they do, and this allows to get better position for itself. Thanks to its enormous level of understanding of the market situation of the asset it operates, such a trader is able to achieve what most only dream of in the markets, which is to obtain financial success beyond all limits.
What a trader of these characteristics knows
A trader who masters logical and abstract thinking at a high level, is capable of exceeding the average traders in their performing and logically, thus achieves greater and better profits than most of them in its trades.
The trader who possesses and makes use of logical and abstract thinking capacity, not only knows when to enter and when to exit the market, and what it should expect versus what it should not wait for in its operations; but also, it knows very well how to control itself to act in a coordinated, coherent and disciplined manner at the right times and in the right proportion required according to its expectations.
The trader who possesses and makes proper use of logical and abstract thinking is an above-average type of trader; and this makes it able to choose projects in which almost no one is sure to invest, projects that end up generating huge profits in most cases.
So, while others criticize and analyze the projects and do not act in a timely manner, the logical-abstract trader not only knows how to analyze and understand what is happening, but also acts accordingly, thus obtaining enormous profitability in most of cases.
So, without a doubt, when a trader manages to develop its capacity for logical and abstract thinking at a good level, it is practically impossible for it not to achieve success when trading the markets.
How can a trader develop the capacity for logical and abstract thinking?
There is no exact guide for this, since if there were, everyone would be a trader with these characteristics; but what if there is no doubt is that traders who manage to develop the capacity for logical and abstract thinking is because they trust themselves, they constantly prepare and study and have an enormous capacity for analysis and self-awareness.
So with patience, tenacity, ability to observe and analyze, and an achievement-oriented awareness, any trader can be able to develop its levels of logical and abstract thinking to unsuspected levels.
Please, comment your opinions on the subject discussed. See you!!