TRADING PSYCHOLOGY 102
Trading is a field that requires a certain mental capacity to achieve long-term success as trading involves tons of emotions expressed by a trader daily in the markets. As every other trader does, I've struggled with different emotions in the markets eg fear, greed, patience, FOMO, over-confidence, anxiety among others.
1. FOMO - Taking trades earlier than supposed to due to the Fear Of Missing Out (FOMO) on the trend leading to losses before price takes the anticipated bias.
2. Greed - Adding entries in an already loosing trade and increasing risk even if the trade is meant to be in my favor creating a huge drawdown first that tends to be quite stressful leading to closing some positions in losses.
3. Patience - Lack of patience to allow a trade setup to play out. This means either taking the trade before confirmation of the setup, or not letting a trade breathe by closing early especially when in drawdown then re-entering even when the trade has not yet touched SL. Cutting winner trades early before they hit their targets and also holding loosing trades too much with the hope that they reverse.
4. Target setting - Lack of daily targets often leading to overtrading and over-risking.
5. Confidence and over-confidence - After a streak of wins one tends to feel over-confident and either over-risks their account, or over-estimates the accuracy of their setups which may end up in losses.
To master one's emotions during their trading journey, one has to first accept to always be a STUDENT OF THE MARKET no matter how successful one becomes. This is because the markets presents itself in different ways each day, each month, each quarter and each year so one learns sth new everyday of their trading journey whether as a beginner or as a professional.
Losses are inevitable in this industry, how one looses and gets back up is what matters. People have a different learning curve time span in which they get to learn themselves in the markets, learn their strategy, back test, adapt and repeat until it becomes a way of life for them in the markets.
With that in mind, one has to learn from the losses and mistakes ones makes in the markets and improve to become a better trader and person.
1. FOMO - Taking trades earlier than supposed to due to the Fear Of Missing Out (FOMO) on the trend leading to losses before price takes the anticipated bias.
2. Greed - Adding entries in an already loosing trade and increasing risk even if the trade is meant to be in my favor creating a huge drawdown first that tends to be quite stressful leading to closing some positions in losses.
3. Patience - Lack of patience to allow a trade setup to play out. This means either taking the trade before confirmation of the setup, or not letting a trade breathe by closing early especially when in drawdown then re-entering even when the trade has not yet touched SL. Cutting winner trades early before they hit their targets and also holding loosing trades too much with the hope that they reverse.
4. Target setting - Lack of daily targets often leading to overtrading and over-risking.
5. Confidence and over-confidence - After a streak of wins one tends to feel over-confident and either over-risks their account, or over-estimates the accuracy of their setups which may end up in losses.
To master one's emotions during their trading journey, one has to first accept to always be a STUDENT OF THE MARKET no matter how successful one becomes. This is because the markets presents itself in different ways each day, each month, each quarter and each year so one learns sth new everyday of their trading journey whether as a beginner or as a professional.
Losses are inevitable in this industry, how one looses and gets back up is what matters. People have a different learning curve time span in which they get to learn themselves in the markets, learn their strategy, back test, adapt and repeat until it becomes a way of life for them in the markets.
With that in mind, one has to learn from the losses and mistakes ones makes in the markets and improve to become a better trader and person.
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