Trading Psychology 101
It's important to remember whilst we take a look at trading psychology and what makes for a successful trader, this is a journey and like every journey we make it has a starting point, the journey itself and the destination. We will all be starting from different points but the journey we take will not be that different and the destination will most likely be the same, financial freedom.
Nowadays more and more psychologists are being invited to evaluate our lives and assess our personality traits. Think about it for a second. Have you ever applied for a new job or promotion at work and been asked to complete a psychometric test? I know I have on several occasions in the past. Well in these tests your potential employer is looking for certain personality qualities to fit the position you have applied for.
The same can be applied to traders. Trading is not so much about trading skill as it is about trading psychology. So let's take a look at what we at 2beanonlinetrader believe are the top 5 personality qualities required to fit a successful trader.
Trading requires a lot of hard work, a lot of hours and if you are going to be a successful trader you will have to take this very seriously. You will have a trading plan with clearly defined entry and exit points. In other words you know when you have planned to buy and when to sell, when to take your profits and when to cut your losses. Everything is planned and nothing is left to chance. You will show the ability to act on your plan and to accept responsibility for your actions especially if the trade goes wrong. It is never anybody else's fault. Goals are set; you know your target markets and the time frames you want to trade. A trader will have planned to keep to a journal. You are ready.
It does not matter what method, system or style of trading you use, you must have the discipline to stick to it. You might have a great plan laid out before you but unless you are going to stick with it you might as well have no plan. Even if things go against you and your trade looks like its going wrong, a disciplined trader will never move the goal posts or step outside his/her set parameters. It's always better to take a small lose and live to trade another day than to risk losing a lot. Don't gamble your money away! A successful trader will have the discipline to keep his/her journal up to date with every trade.
You must remain emotionally detached from your trades, stick with your trade set up and let the market do its thing. It is important not to let your ego get the better of you or become to overconfident both will cause big losses and bring an abrupt end to your trading career. Never let your emotions get in the way or act on an impulse. Stay cool calm and collected.
The market has a habit of changing quickly and you will need to be able to adapt to the changing conditions. Also although you will have you plan set, you will not have closed your mind off to new ideas or other possibilities if they seem promising.
Successful traders are people who don't give up, they make things happen with a winner’s mentality and an inner believe that come what they may, will succeed. If at first you don't succeed try again. Succeed means making money which after all is why we all want to try.
So to sum up trading psychology, we all start a journey from different starting points, some of you might believe you have all the 5 character traits above and some might struggle with them. Please remember you are only at the start things change and so can you. The purpose of this website is to help you not only understand subjects such as technical analysis, charts and trading strategies but also the other side of trading like coping with your emotions and developing your character. Most of all you must enjoy the trip.
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