Wasn’t there a thread like this posted last week. I remember replying with a similar solution when it comes to trading psychology.
There is an old book called “Trading in the Zone” and it’s not really for technical analysis but it will shape how you react when you are in a trade. It’s probably 2 decades old but it’s principles still apply today and to crypto markets also. You can find this book anywhere. You will read a little bit and you will be blown away how accurate it is.
Topic: Trading Psychology and tips - page 4. (Read 552 times)
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Interesting but what would be more interesting would be to know for sure if you really are a trader and also one of the few who earn money in the long term, because what you have written can be done by gathering information on the internet and some experience in trading but without being a consistent winner like the vast majority. Seeing the few posts that you have written in this section since you registered and that in none of them you talk about specific trades or put charts, I think it is the latter.
This topic is intended to help traders dealing with trading psychology. I have experienced it and read about it and decided to share my take on it. This is not entirely my own excerpt but a culmination of people's experiences, points and opinions also.
I have been, to the best of my knowledge, concise in communicating my submission through this write up for your comprehension. Feel free to make input and edits as required.
Intro
Trading has been the most independent and global approach towards personal income generation from the foreign exchange/derivatives market. These players in the trading industry however, encounter challenges that interfere with their trading operations beyond their direct involvement in finance but the consequences are obviously evident in their finances, it’s generally called Trading Psychology.
The study and knowledge of psychological and emotional occurrences influencing the behavioral patterns, performance and decisions of traders in the financial market is best described as trading psychology. It is no doubt that a significant percentage of traders have, over time battled with trading psychology and its challenges.
I’ll narrow down the key elements posing a challenge to traders to ‘Greed and Fear’ and its antidote as Risk management and Discipline.
If the key elements are addressed properly then a trader has little or nothing to worry about once he has his knowledge of trading in place.
Greed is the desire for more profit, often characterized by a fact-less believe that a market condition will continue in the direction of profit for his benefit.
Fear, contextually, is the refusal to allow the researched output-birthed setup to play out, thereby terminating the process abruptly irrespective of loss or gains accrued.
These challenges can be tackled by way of Discipline and Risk Management.
Discipline the ability is to stick to a trading rule or plan irrespective of the conditions, pleasant or unpleasant. One must be disciplined to believe in oneself irrespective of what the outcome of trades are and accept it as a strategy either to adopt or to further modify, but, has been personally derived to sooth personal trades.
Risk management is analyzing the potential losses in advance and mitigating them, this is done to protect the entire loss of the trading capital. Risk management is an essential part of trading culture, if you must remain in the trading business, you must learn to prioritize risk management as an essential tool for success.
Tips on Trading Psychology
Knowing that your success in the market is largely dependent on your trading psychology, it is therefore pertinent to say that it should be given noble consideration by every trader.
Prioritize your Setup
The setup is not guaranteed to always playout as expected but that doesn’t invalidate your speculative capability or ability to analyze, it only means that the market direction deviated from the plan, which is also expected as one of the characteristics of the market, although it comes with its own downsides as you get to incur losses but again your risk management will mitigate that moderately.
Downturns are normal
Always note that you are a player amongst millions of players including financial institutions, things wouldn’t always go your way, with this consciousness, invalidated setups will not mess with your emotions. It’s a default understanding, therefore, you have a large heart to accommodate it even before it shows up.
Evaluate your Trading Strategy
The idea behind trading is to make profit, therefore, the trading strategy you choose to deploy has to reflect positive growth on your equity, if it doesn’t, then you should consider re-evaluating it to something better.
Be Focused
Too much content on trading and traders to digest on the internet, as much as they might be valid and true, they might not be relevant and consistent with what builds your confidence and capability in the financial market. Focus on what works for you and cut out the noise.
Utilize Risk as a Tool (Leverage Risk)
You must understand that risk is an integral part of trading but can be used as a tool at minimal levels. Readjusting your stop losses and incurring losses in a bit to reduce your loss isn’t an ideal approach. After a proper setup involving a moderate risk management, allow for trade to play out as most times, we incur the losses we are avoiding when we go readjusting our stop loss.
A Winning Exit Plan is Key
You must understand that having a winning exit plan in every trade is instrumental to the success of that trade even before opening a position. You are more relaxed when you have a take profit in place even before your buy/sell order is filled.
Your Losses, Your Lessons
Revisit the strategies and mistakes that caused your lost trades and accept responsibility, learn from it and improve your skills, you’d feel a whole lot better. In cases where unforeseen circumstances in the market played out and it deviated from your result, you accept the looses and keep the grind alive.
Trust your Analysis
As long as you do you due diligence on your setup after analyzing, take the shot. It is never a guarantee but once your setup says ‘go’, go with it.
Lastly,
Win Always
“You may lose a battle but always win the war”
Let your number of winning trades always outnumber your lost trades. An average of 60% winning trades (weekly or monthly) makes you a profitable trader and keeps you winning.
I have been, to the best of my knowledge, concise in communicating my submission through this write up for your comprehension. Feel free to make input and edits as required.
Intro
Trading has been the most independent and global approach towards personal income generation from the foreign exchange/derivatives market. These players in the trading industry however, encounter challenges that interfere with their trading operations beyond their direct involvement in finance but the consequences are obviously evident in their finances, it’s generally called Trading Psychology.
The study and knowledge of psychological and emotional occurrences influencing the behavioral patterns, performance and decisions of traders in the financial market is best described as trading psychology. It is no doubt that a significant percentage of traders have, over time battled with trading psychology and its challenges.
I’ll narrow down the key elements posing a challenge to traders to ‘Greed and Fear’ and its antidote as Risk management and Discipline.
If the key elements are addressed properly then a trader has little or nothing to worry about once he has his knowledge of trading in place.
Greed is the desire for more profit, often characterized by a fact-less believe that a market condition will continue in the direction of profit for his benefit.
Fear, contextually, is the refusal to allow the researched output-birthed setup to play out, thereby terminating the process abruptly irrespective of loss or gains accrued.
These challenges can be tackled by way of Discipline and Risk Management.
Discipline the ability is to stick to a trading rule or plan irrespective of the conditions, pleasant or unpleasant. One must be disciplined to believe in oneself irrespective of what the outcome of trades are and accept it as a strategy either to adopt or to further modify, but, has been personally derived to sooth personal trades.
Risk management is analyzing the potential losses in advance and mitigating them, this is done to protect the entire loss of the trading capital. Risk management is an essential part of trading culture, if you must remain in the trading business, you must learn to prioritize risk management as an essential tool for success.
Tips on Trading Psychology
Knowing that your success in the market is largely dependent on your trading psychology, it is therefore pertinent to say that it should be given noble consideration by every trader.
Prioritize your Setup
The setup is not guaranteed to always playout as expected but that doesn’t invalidate your speculative capability or ability to analyze, it only means that the market direction deviated from the plan, which is also expected as one of the characteristics of the market, although it comes with its own downsides as you get to incur losses but again your risk management will mitigate that moderately.
Downturns are normal
Always note that you are a player amongst millions of players including financial institutions, things wouldn’t always go your way, with this consciousness, invalidated setups will not mess with your emotions. It’s a default understanding, therefore, you have a large heart to accommodate it even before it shows up.
Evaluate your Trading Strategy
The idea behind trading is to make profit, therefore, the trading strategy you choose to deploy has to reflect positive growth on your equity, if it doesn’t, then you should consider re-evaluating it to something better.
Be Focused
Too much content on trading and traders to digest on the internet, as much as they might be valid and true, they might not be relevant and consistent with what builds your confidence and capability in the financial market. Focus on what works for you and cut out the noise.
Utilize Risk as a Tool (Leverage Risk)
You must understand that risk is an integral part of trading but can be used as a tool at minimal levels. Readjusting your stop losses and incurring losses in a bit to reduce your loss isn’t an ideal approach. After a proper setup involving a moderate risk management, allow for trade to play out as most times, we incur the losses we are avoiding when we go readjusting our stop loss.
A Winning Exit Plan is Key
You must understand that having a winning exit plan in every trade is instrumental to the success of that trade even before opening a position. You are more relaxed when you have a take profit in place even before your buy/sell order is filled.
Your Losses, Your Lessons
Revisit the strategies and mistakes that caused your lost trades and accept responsibility, learn from it and improve your skills, you’d feel a whole lot better. In cases where unforeseen circumstances in the market played out and it deviated from your result, you accept the looses and keep the grind alive.
Trust your Analysis
As long as you do you due diligence on your setup after analyzing, take the shot. It is never a guarantee but once your setup says ‘go’, go with it.
Lastly,
Win Always
“You may lose a battle but always win the war”
Let your number of winning trades always outnumber your lost trades. An average of 60% winning trades (weekly or monthly) makes you a profitable trader and keeps you winning.
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