INTERVIEW: Mindset - Anish Sikri
U.S Investing Championship Top Performer, +209.6% return in 2020
The importance of psychology and mindset in the market is often understated, while some great traders such as Mark Minervini even say it is the most important part of trading:
Today we have
, Anish is an excellent trader and top-performer in the U.S Investing Championship with a +209.6% return in 2020. He is someone I follow closely on twitter and always gain valuable information from, today he is speaking to us on the importance of mindset and psychology in trading:When starting out and experiencing the losses every new trader experiences, what helped you maintain focus and self-belief to know that it would eventually pay off?
I always wanted to trade stocks and the discovery of William O’Neil’s books and IBD Newspaper changed everything for me overnight. I believed I hit a gold mine. His work showed me that there is a way to achieve financial success rather than randomly buying based on rumors, TV stock pitches, and praying that the trades work out. While reading his book, I came across Jack Schwager’s Legendary Market Wizards series. Reading that was fueling my ambition/dream to become a hedge fund manager. I kept reading all the books which inspired O’Neil: - Darvas, Livermore, Loeb.
In addition to inspiration from the books, I always held a strong internal belief that it would eventually pay off- weather it takes years or not - due to my past personal milestone achievements (Djing, Linux/CyberSecurity, Patent Law). I can go on tangents about this one, but maybe I should save some fun stories for later
How do you maintain the required discipline to sit on your hands when your setups aren’t showing up and avoid overtrading?
This one is still a challenge for me at times. The best approach I have come up with is to reduce position size when trades aren’t working and to keep trading that size or smaller until gains start coming. In 2021 I had traded a total of 1500 trades (750 buys / 750 sells), but that was the nature of the market at that time (small burst move market).
When losses start to rack up, you either learn to respect discipline or get wiped out.
How do losses affect your mindset and how do you combat that to not lose confidence in yourself and in your system and get back on track?
Losses affect the mindset by showing you that if you didn’t lose money, you could be trading large on this new trade which is working at times. Heck, it works in tandem with fear and greed and amplifies fomo at times. Even worse is when it pushes the trader to seek out information from bad sources such as TV anchors or talking to random people on Twitter about the stock (majority of the time, it probably is a bot pumping information). Whatever the source is, it makes the trader find conviction on the trade (while losses are piling up). I myself have been through this fiasco. I said to myself I will never fall in this trap, yet I did in 2015. The result was a disaster - Blew my account up just like a Hollywood style explosion.
You question everything at this time, as your mindset is in turmoil. The best way to combat this is to understand attachment/detachment and ignite the Positive Mindset.
If you really think about it, one’s personal greed/fear plays with one’s attachment to his/her trades. Losses do make a trader question the work he/she has been learning and the trader begins to style drift. This is the worst mistake a trader can do as one then becomes a mediocre trader with a hodge-podge of conflicting strategies. You must become a master trader not a jack of all trades (pun intended).
I started to detach myself from the fruit of the trades (aka profit) and instead begin to focus on the process of getting in and out of the trade. Discipline is needed.
A Positive Mindset is a mandatory requirement in this endeavor. You can complain and cry like a baby or do something about it. This is a 24/7 requirement. It affects everything from how you carry yourself to how you interact with your environment.
A Positive Mindset attracts success; even when facing defeat, you can find an opportunity to win. It is the ability to pivot which changes everything. This doesn’t happen by only reading books. One must practice this in every facet of life. You must become more. Please study Jim Rohn and Napoleon Hill works on this subject.
What were your hardest challenges to overcome on the way to becoming a successful trader?
The hardest challenge to overcome was having people believe in me when I started to trade. Basically, I only had 6 people (family & friends total) who believed in my dream. During the start of the journey positive encouragement from key family & friends was crucial, yet I was missing it. It is true “First they ignore you, then they laugh at you, then they fight you, then you win”.
But as I started to progress in my growth/learning, the challenge just dissipated. I met people who started believing in me like William O’Neil, Mark Minervini, Peter Brandt, Jack Schwager, Charles Harris, Mike Webster, Lee Tanner, all the members of my theDistrict IBD meetup group, few amazing new friends I have made from the workshops that I have attended, my USIC 2020 trading buddies, TraderLion Team, and even you Stockbsessed, along with the amazing FinTwit community.
Why do you think most retail traders fail to be successful in the market?
Work on your mind first, and then you will see opportunities everywhere. With the right mindset you can see longs in the bull market and shorts in the bear market. If you want to visually see the vibe of a successful trader vs a weak trader, just find the documentary “The Trader” of Paul Tudor Jones. He has the right mindset to win. When I first met Mark Minervini at the Nova IBD Meetup Group event in 2017, I was amazed at how he carried himself like a winner; it was unreal. Success breeds success. If you want to be a winner hang out with winners and if you want to be a loser hang out with losers. No one is born a winner, there are natural talents for sure, but one has to work the mindset and everyone has a chance to make it. Just read Mark Minervini’s “Mindset Secrets for Winning” Book. I would also add Napoleon Hill’s Think and Grow Rich and Outwitting the Devil (The Blue Cover One – Official Publication of Napoleon Hill Foundation Without Sharon Lechter Annotation edition – yes without)
Mindset development is constant work, as so is research on the trades. Study the winners and pick a style and master it. Retail traders are jumping on styles and adding complexity to their systems without having mastered even one style.
And yes, you do have to manage losses because if they go out of hand, you are out of commission.
Successful trading takes time. I thought a triple-digits return would happen within 2 years of my trading. I am glad that it didn’t happen that way.