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Trading Psychology

Trading psychology

Financial Markets are neither moral nor immoral – they’re amoral.
The markets have no emotions at all, so it’s completely up to the traders how they perceive the market to be. If your goal in the long run is to attain and maintain the status of a trader, it’s very important to develop a mindset that helps you observe the market from an unemotional perspective.

Your mindset will ultimately define your reactions during losing trades or large profits – will you be able to stay calm during these events and avoid reacting based on emotions?
Trading is one of the most challenging, exhilarating and profitable careers you can choose. And when we say challenging, think challenging right down to the core of your identity.

This is because our brains were created to help us survive a hostile physical environment. As a result, our brains are “hard-wired” to react in ways that don’t serve us well in our journey to becoming consistently profitable independent professional traders.

This is one thing for sure, if you want to be successful at trading you need to study and practice. If you don’t learn how to trade before you start trading with real money you will go through a great deal of fear, pain, and loss of money. And this emotional rollercoaster can be extremely unpleasant, let’s have a look, at the number of emotions, and the sequence and the rate at which they can appear, one after another.

Traders can benefit a lot from approaching the market from a calm and relaxed mentality. If you have proper risk management guidelines in place, there is no need to worry about trades at all. In the end, what can go wrong?

Even if a trade hits your stop-loss level, it’s not the end of the world. Losing trades happen all the time, and even professional traders have a winning rate closer to 50%, much less than what you might think. With a high enough reward-to-risk ratio, which is the ratio of your potential profit and potential loss on a single trade, you’ll still end up in profit even with a 50% winning rate.

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