There’s a long laundry list of things that can contribute to our success as active investors. High on that list is having (and sticking to) an effective methodology that helps you harvest gains and keep losses contained. The right tools for finding and then implementing ideas are also essential. However, one aspect that isn’t often discussed as often but contributes tremendously to your long-term success is cultivating the right mindset.

I know, I know. California Woo-Woo. But hear me out. In order to produce a steady stream of profits over the long haul, you need to embrace positive thinking. Nothing determines your level of success more than the way that you think about the market.

The bad news is that learning to keep a consistently positive mindset is challenging, which probably won’t be news to anyone navigating this market this year. The right mindset doesn’t mean not acknowledging (and taking the necessary steps to manage) poor pricing action or expecting the market to suddenly reverse higher and rocket to fresh highs. And, in a strong market, it doesn’t mean deluding yourself (and others) that whatever you buy will rocket “To The Moon!”

What it does mean is embracing the facts that: 1. No one can predict the future, 2. The market is cyclical in nature, and 3. There will always be a steady supply of new opportunities in the market. 

It’s also important to acknowledge and gameplan for the fact that the market gods will do everything in their power to trip you up, and that you will make mistakes along the way. Even the best traders have names in their portfolios that blow up from time to time. The only way to avoid it is by building a laddered cd portfolio and finding something else to do. 

Accordingly, the best way to actively develop a positive mindset is to be constantly aware of your thought process and the many biases that can influence your decision-making. Taking time to practice positive self-talk and sticking post-it notes on your monitor to remind yourself of the three essential facts above may seem silly at first, but will go a long way in helping you stay focused and confident. 

Meanwhile, another key is to surround yourself with others who think positively as well. That doesn’t mean only interacting with market cheerleaders who think that the only thing the market should ever do it go up. It means engaging with other active investors who are disciplined and realistic, and understand that there are many, many strategies and approaches to trading and investing that work (and that none are inherently better than another). 

If you want to increase the odds that you will have long-term success, the key is inside your head. Develop the right attitude and habits, and the trades will come.