Trading Psychology Can Make or Break You As A Trader
A very key element which usually is neglected in the trading world is the importance of psychology in trading. All successful traders know it while most beginners know nothing of it.
Majority of losses stem from mistakes that are made due to bad discipline, which is also a matter of your faulty mindset.
The good things is that this can be improved through learning about the specific emotions that affect you and trying to not give in to them. We also teach our students a very specific trading strategy which is process driven in turn your emotions as a trader may not in any way hinder you from success as a trader.
Trading psychology refers to an individuals mental state of mind which usually determines that traders ability to be successful in the market. To MyFxMentor it is the most important aspect of any traders journey far more than knowledge, experience and skill.
We always tell our students that learning the skill is the easy part especially with the way we approach our lessons, the skill is easy to gain, it is the psychology that is very important, your mental approach towards the market.
These are some of the main lessons from one of the best Trading Psychology teachers of all time – Mark Douglas.
90% of the money is lost due to emotions – fear of being wrong, fear of missing out.
Traders must think in probabilities.
Professional traders think differently than the others. The winners have obtained a mindset, they are confident. They are not open to the fears and worries that new traders have.
Learning to accept the risk is one of the most vital skills. Trading is inherently risky, the possibility of being wrong is always present. The best traders have learned to accept the risks inherent in all their trades. Most newbies are not really ready. Suffering losses, should not be something to fear, but to be expected.
The best traders aren’t afraid. They flow in and out of trades based on what the market is telling them, instead of being afraid and acting on emotions.
We need proper technique to reach consistent profits. People think that learning more about the market is the way to profits, but this is not true. Every trade has an uncertain outcome and you need to accept it. Only when you have achieved the state of mind to truly accept risk, you can become consistently profitable.
You need to achieve a traders’ mindset. You need to adjust your emotions to be free of fear, while having a framework for not becoming reckless.
Having the right trading mindset helps you to be continually protected and improved throughout your entire trading career.
You need to eliminate emotions and biases that are in your mind in order to objectively know what the market is telling you. So how do you develop an open-minded conviction as a trader?
Get Comfortable With Taking Risks
If you want to be a winning trader, you need to develop a high risk tolerance.
Loss often generates powerful emotions like self-doubt, uncertainty, fear, and apprehension. However, winning traders understand that losing money is part of the game of trading, and the outcome of each trade is not known.
Always be ready to put your money on the line for potentially better results without letting fear of losing money put you on the sidelines. A winning trader is able to emotionally acknowledge that risk and reward go hand in hand in the world of trading.
Nonetheless, you also need to understand the importance of money management and take responsibility for managing your risks.
Don’t Just Place Trades
A winning trader tends to take a break from trading when their results are poor. However, the trader doesn’t take a break from analysing his/her results. You need to carefully figure out whether it is time to adopt another trading strategy or sit on the sidelines when your strategies fail to work.
So many losses are made because some traders just place trades without doing proper analysis. Don’t just guess at what to do. You need to have a sound reason for all the trades you place. That is what successful traders do!
Never Stop Learning
One of the most common things that winning traders do to improve their trading psychology is creating a great base of knowledge. Increasing your knowledge about how the world of trading works helps you make better decisions, both on the short and long-term.
Getting to know about how trading works can help you react in a calm manner to the many curveballs that will cross your way in the course of trading..
One way of educating yourself is by sticking with professionals who understand how markets work. The skills and strategies that you are going to learn from them can help a great deal.
Knowledgeable traders also understand that importance of adjusting to changing market conditions. In short, they change their view with ease when markets indicate that they need to so.
Once you become mindful of your emotional reactions and personal tendencies in trades, you will be able to identify shortcomings that often hold you back. You can then work on eradicating those emotionally reactive responses while trading, and develop a sturdier sense of steadiness.
Happy Trading
MYFXMENTOR.COM
Risk disclaimer: The information presented on our blog are for educational and entertainment purposes only. Nothing on this website serves as investment advice or recommendations. Trading is risky and you can lose more than your initial investment. MyFxMentor cannot be held responsible for any decisions visitors make. Please consult a financial advisor before making any investment decisions. Risk disclaimer.
