When you decided to be a trader and be good with it in the future. You have to decide also to re-wire your brain on an unusual mindset.
There is no BEST TRADER in the world. When you put yourself into this business, you have to believe that you can not be the best trader in the world and you can not beat the World Forex Market. You are only as good as your trading plan. You are only as good as your “Entry Plan”. You are only as good as your Money Management plan. You are only as good as your 'Exit Plan". You are only as good as how you follow your trading plan. You are only as good as your last trade. Even if you hit the TP this morning and gain 20% in one trade, still you are not the best trader in the world or in any group. Even if you hit 500% this month, still you are not the best trader in the world. Even if you hit 3,000% this year, still you are not the best trader in the World. Always think that the most important thing for you to do your next best is to plan for it. If you can not imagine how your next trade will end, good or bad, your past performance is all negligible. KEEP THIS IN MIND.
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If a trader cannot manage psychology properly, he will never be able to trade successfully. It is possible to earn trading profit by controlling emotions. Many traders cannot make a profit by trading for a long time because their psychology is very weak. They trade with greed and fear.
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With respect, this is a negative psychological approach to controlling emotion - and one I do not support. In a nutshell, humans are geared to avoid PAIN at any cost, as it’s a precursor to not surviving life.
So, in trading practice, traders are fearful that their trades would be losers, and thus cause pain - so they let losing trades run in the hope that they will reverse back into profitable territory, instead of cutting the trade. This opens up a mindset of revenge trading to get the loss back, and/or overtrading - both of which causes capital loss.
The control here is to reset the mindset to hate losing bigger, more so - and to succeed in ‘saving’ money to fund the next waiting trade…
And ironically, they would take profits out of a winning trade because they are fearful that it would reverse, therefore causing pain. This is harder to control, and a stop-gap solution is to let a portion of the winning trade continue to run, adjusting the S/L along the way. Top pros would add to winning trades, using safety techniques to limit risk to a break-even end.
IMO, providing traders follow their process to the letter on every trade, they are good traders who enter/exit good trades - whatever the outcome. That’s a patient and disciplined mindset.
I hope that is a more positive approach to controlling emotional fears.
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Trading psychology can never be successful if it is not managed in the right way. You need to know how to trade with a positive mindset.
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I was just thinking of this (well, not fully but you did make a fine point!)
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Soon as you think you are sound the markets will bite you in the behind! Always push to keep improving as you always can.
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A right trading mindset becomes clear when you have specified your goals and targets, you will often face a lot of emotional issues but try not to lose patience. It is better to calm your mind first instead of making an unfavourable move that can go against you.
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A relaxed and calm mindset is very important while placing trades. Recently I have started meditating to release my trade related stress. What do you do to relax yourself?
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Trading psychology is the emotional component of investor’s decision making process which may help explain why some decisions appear more rational than others. Trading psychology is characterized primarily as the influence of both greed and fear. Greed drives decisions that appear to accept too much risk.
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I know controlling emotions is not as easy as said in the market. But if you are not able to do that, you won’t be able to go far in the market. You are required to make decisions in the market but those should not be made under the influence of your emotions. It should solely be market analysis and nothing else.
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