Trading psychology is the whole reason why there are many winning systems but yet so many traders still lose money. The reason is that they cannot stay disciplined on following rules and let their emotions get in the way. Understanding trading psychology and following through with it will help your trading out tremendously.
Trading psychology is the most important part of trading. I've read that successful trading is around 87% trading psychology and only 13% goes to your trading style. I personally learned the hard way, i recommend everyone, novice or advanced to always excel with their trading psychology.
I have read the same, that trading is actually 80% psychological and 20% technical. That is NOT to downplay the technical side at all. There is a lot involved with the technical side which means there is a whole LOT MORE involved in inner discipline.
Succesful trading involves 3 factors that must all be present in order for any trader to make it. Individually, each of these factors is useless but together, you succeed. They are:
1. Method: You need a system or set of rules to dictate your decision making. The system itself accounts for 10% of what it takes to succeed
2. Money Management: You can have the best system in the world but if you start betting too much on each trade, you will get taken out even if your system is 90% accurate. Money management accounts for 30% of the puzzle
3. Personal Psychology: This accounts for the remaining 60% of what it takes to succeed. This is obvioulsy the most important element without which you have no hope. This is all about discipline and doing whatever it takes to stay that way. But even if you are the most disciplined person on earth, it will not help you if you are trading a losing system. All you will end up doing is having the discipline to follow the rules straight to the poor house.
So the bottom line is really that you need all these aspects working together or nothing will work
This stuff is all out of Van Tharp's work and i highly recommend it as reading material
Pipbull, great info mate. You may want to make a note of a 4th point which is equally as important: Mass Psychology. learning & understanding mass psychology is the next step towards successful trading. Mass psychology is what determines price movement & behavior. It is the reason why we see patterns in trading & why theories like the Elliot wave theory work so well.
Tha trading psychology role have big impact of trading result cause greedy , fer , emotion , frustration and many negative things are part of trading psychology . but almost trader carelessly about this aspect while they trade more and more nothing notice about this problem
I'm going to play devils advocate. Trading psychology is just an excuse for not taking responsibility for your own trading decisions. Rubbish spread by the marketing arm of your broker.Trading in reality is boring as ..... How can anyone really attach emotions to trading.