What should I consider in the Psychology of Trading?
One of the critical parts of trading that traders ought to master is Psychology. Talking from experience in the markets, trading is not only a chart and market sentiment skill but also a mental undertaking. Every trader at whichever level can attest to the challenges that come with managing their trading psychology. Well, it is something that any trader can overcome. Herein, we look at the things you should consider for your trading psychology.
Short Term Memory
You need to have a short term memory when it comes to losses and wins. Do not let losses define you and get you into a sorry state. Also, do not let your wins get over your head as this breeds overconfidence which can be detrimental to your trading. Focus on executing every new trade according to your rules and stick to that.
When you make good returns from your trading, reward yourself. This motivates you and mentally ties real value to your trading by confirming to you that you can actually achieve set goals from your skill. More importantly, take time off the markets after a loss, as it helps you reflect and get back to the markets later with a clearer mind.
A side hustle to Take Care of you until Trading can
You should ensure that you have savings while you start your trading journey. Every trader’s journey is unique. You might get the grip of trading relatively slower than you expected. As such, you do not want to put unrealistic targets to your trading to cover your bills. Ensure that you have enough funds or are working a side gig or business that funds your life before venturing into trading. Additionally, do not trade your living expenses funds such as rent, food, and school fees.
Avoid the Rollercoaster of Emotions
Emotions are often an emotional enterprise to most traders. Seasoned and successful traders hardly attach emotions to their trading and whenever they fall short, are quick to remedy their emotional state. Avoid Euphoria on wins as it leads to overconfidence that will easily make you bend your trading rules. Further, do not stick to losing positions. Cut your losses early and let winners run in accordance with your system.
Do not let neither greed nor fear invade your trading. Fear makes you miss opportunities that your system finds successful hence affecting your money making ability in the market. Greed makes your carefree and sometimes reckless which is always a ticking time bomb. If need be design in your system a rule that limits the number or trades you can take in a day or week whether losses or profits are made. Sticking to your proven system.
Have an Accountability Partner
Last but not least, have an accountability partner. An accountability partner will help you stick to your rules. Share with your partner your system and its parameters. Have your partner help you walk through your trading journey. You partner does not necessarily have to be a trader or an investor. As long as they understand your course through your guidance and what you are trying to achieve, are willing, and teachable, they fit the role.
Do you want to know more and design your system around all that matters in trading? Sign up to our course. Also, would you be looking for a broker? Exness has got you covered, sign up on their platform.
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