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Zak Westphal: 5 Psychological Pillars for Making Long-Term Trading Profits

From the outside looking in, trading the markets seems to live in the realm of cold numbers and sharp analysis. But spend time amongst the upper echelon of traders and you’ll hear a different story. The technical indicators only get you so far. To reach the top tier, you must couple analysis with a championship mindset so you can overcome the twists, turns, and often head-on collisions that the market will throw your way.

Zak Westphal, co-founder and CEO of StocksToTrade, knows this hard truth as well as anyone. “Sure the chart patterns matter,” he explains - “but without rock-solid psychology guiding those signals, you’ll get chewed up and spit out.”

Through endless trades and reflections, Westphal has codified the mental disciplines that allow traders to find consistent success - the psychology separating also-rans from market wizards. Today, we’ll explore those critical mental pillars.

1 - Iron-Willed Discipline

“Anyone can jump into a high-leverage trade and get lucky one time. But eventually, if you keep making risky plays like this, you’re going to get found out. The market does not take any prisoners. The key to success is playing for the long-term, and to do that, you’ll need one thing adobe all - and that’s discipline,” says Westphal.

Specifically, he highlights the need for systematic rules guiding entries, exits and trade management. No flying by instinct. "You need a trading framework that you will stick to, no matter what. These are strict guidelines informing decisions no matter how compelling those emotional pulls may feel," Westphal explains. "Without that ruthless rule-following, you're just gambling, not trading."

According to Westphal, the biggest account killers are traders abandoning proven plans mid-trade. "In the heat of the moment, your rules can fade behind emotion. Stay locked in."

His solution - brutally tracking each decision against your system. "That accountability pressure tests your rules and mindset, forcing you to tighten up weaknesses over time," says Westphal. "Review your trades with radical honesty and your system will evolve to override emotion with logic." Yes, this is much easier said than done, but the alternative means you’re always one step away from burning through your entire trading balance in one monet of madness.

2 - Focus

While the best traders in the world all have discipline in spades, the one extra ingredient that helps them eke out an extra edge is patience - a trait Westphal believes is often overlooked when it comes to measuring trading success.

Zak helps his students find that “zen-like patience and composure no matter how chaotic price action becomes”. Rather than panic, remain calm and focused. As Westphal tells his students, "You gotta adopt a sniper mentality - cool, poised, patiently scoping for your shot. Don't spray trades wildly without precision like Rambo with a machine gun. Have the courage to endure boredom in between high-value trades."

This patient focus prevents you from coughing up commissions and bid/ask spreads on low-probability gambles. And it saves mental bandwidth for prime setups. "Wait to pull the trigger until you see your defined entries," Westphal urges. "No chasing shiny objects or forcing trades from desperation." Patience and discipline work hand-in-hand.

3 - Learning Mindset

Westphal stresses that if you really want to make it as a full-time trader, you need "a ravenous hunger to learn - extracting insights from wins, losses and everything between." But most traders lack systems to harness those lessons.

"After each trade, conduct a brutally honest post-mortem in your journal," Westphal explains. "Relentlessly hunt for marginal improvements, whether better entries, smarter exits or avoiding emotional biases. Compound those incremental wins over a trading career and your profitability will blast off."

This thirst for growth stands apart from reactive traders focused on results. "Obsessing over P&L leads traders to chase arbitrary targets rather than refining their processes," says Westphal. "Outcomes follow process. Dial that in, profits will come."

4 - Self Awareness

Westphal knows "our minds come loaded with biases and reflexes which distort our decisions. Most of them we don’t even recognize in ourselves ." Cognitive shortcuts like loss aversion routinely ambush even seasoned traders - and let’s not forget about chasing losses.

The solution - recognizing those innate blindspots, then caging their influence. "You can't fully override them, but you can reduce their sway," Westphal explains. "When you feel emotions overwhelming reason or forcing trades to confirm biases, catch yourself then correct course."

Anchoring trades to data-driven rules is a great way to limit bias and impulse from hijacking strategic thinking.

5 - Stoicism and Resilience

Westphal levels with traders - "Losses are guaranteed if you play this game long enough. At this stage, I have learned to see those losses like I’m paying tuition." But he notes that "how you absorb and rebound from those kicks defines long-term success."

Finding a way to create some sort of philosophical acceptance of market uncertainty is going to prove vital. "Battling what the market serves up is fruitless and  most of all - it’s exhausting," Westphal says. "Flow with what is rather than railing against what you wish was."

This stoic resilience requires flipping perspective on wins and losses - seeing both as feedback driving growth rather than self-worth measurements. As Westphal puts it, "Stay mentally flexible to process those outcomes for future refinement." This frees mental bandwidth otherwise occupied with self-flagellation.

Final Word

There you have it — the five critical mental pillars separating the herd from market masters, according to trading veteran Zak Westphal. Dial in that trading psychology as much as your chart analysis, and new realms of profitability open up. Neglect it, and you'll be swept up by emotion and inevitably spit out.

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Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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