The difference between a fixed mindset and a growth mindset in trading is the difference between an unsuccessful trader and a successful one. If you read Mindset: The New Psychology of Success by Carol Dweck, you will understand that the difference between a fixed mindset and a growth mindset determines whether you will succeed in life in general, as it influences all your activities—relationships, careers, and health.

A fixed mindset can lead you to wrongly conclude that you are not good at something. For instance, if you see your PnL (profits and losses) line after the first month and think that your numbers are not as good as you wanted because: ‘I have a bad terminal,’ ‘I’m a bad trader,’ or ‘trading is too hard for me,’ this reflects a fixed mindset.

In other words, it’s like approaching a person you like, wanting that person to like you, but they don’t. You might then conclude: ‘There’s something wrong with my personality,’ or ‘I will never get such a great girl/guy.’

A growth mindset shifts your focus to where or what you want to be in the future. So you look at your PnL underperformance and think your numbers were not good enough because: ‘I was not in the right stocks,’ or ‘I was not preparing well enough.’ Then you create a plan to correct those things.

When your mentor says that you should be in better stocks, that your preparation is poor, and gives you tips to fix it, a person with a growth mindset will be happy to listen to the criticism, while a person with a fixed mindset will feel offended.

We all have a fixed mindset in certain areas and a growth mindset in others. You have to catch yourself when you are in a fixed mindset, remind yourself that it’s not right to think that way, and switch to a growth mindset.