Abstract：Trading profitably a skill which requires you to master multiple set of traits. You have to master fundamental and technical analysis and learn to incorporate them into your trading strategy. You have to master your trading strategy and build confidence in it as well as incorporate good risk management. But, the biggest trait to master will be your trading psychology, the mental state you will be in when trading.
Trading profitably a skill which requires you to master multiple set of traits. You have to master fundamental and technical analysis and learn to incorporate them into your trading strategy. You have to master your trading strategy and build confidence in it as well as incorporate good risk management. But, the biggest trait to master will be your trading psychology, the mental state you will be in when trading.
Any trader who has a few years under their belt will understand the importance of your mental state when trading. Not only can fear and doubt creep into your mind and cause hesitation, but greed and euphoria can also cause you to lose your sense of risk management and blow your account in no time. It is best to manage these emotions and get ahead on your trading journey
Greed and Euphoria
During a winning trade, one feels as though they are on top of the world and that they can do absolutely no wrong. But we should be very weary of the state of mind as it can encourage destructive behavior on your account. You may start to develop over confidence in your trading ability due to the euphoria and start to open an unwarranted number of trades, or over risking. This is also due to greed as you start already thinking about the money you will make with such huge positions forgetting that the position can go against you.
This doesn‘t help that nowadays some brokers can offer you fool’s gold in the form of deposit bonuses and crazy maximum lot sizes. Be very careful when choosing such a broker because these are actually underhanded tactics which only encourage you to risk more when trading. For instance, a broker will give you a 100% bonus so that you can open bigger lot sizes but the moment your own money finishes you cannot trade with the deposit bonus afforded to you or withdraw it. Same goes with brokers offering very high leverage. They simply want to entice you to open position which are too large for your account to handle and in a few ticks you are stopped out of the market.
So stay away from brokers offering these packages. When looking for a reputable broker, which is regulated and verified and also does not employ these cheap tactics, look through WikiFx. This app will help you compare brokers and find the best reputable, regulated and verified brokers so that you can rest easy and trade within a environment which encourages you to trade responsibly.
Fear and Doubt
These emotions are what hinder you from pressing that buy or sell button when you see an opportunity present itself in the market. It can also go against you during an open trade as due to the fear of losing the little profits you have earned and doubting the strength of your position you can bail out of a trade before it fully matures and gives more profits than you settled for.
These emotions usually signal that 1) you are over risking and 2) you have not back tested your trading strategy. If you cannot confidently leave your trade alone to run and you need to be constantly checking the charts it probably means that you are over risking that account. Every trade you take you should be able to set an appropriate stop loss and take profit (if desired) and walk away from the screen. This is because you will know that you only risking a certain amount and that your whole account is not at risk. You remove fear when you set the your expectations correctly and manage risk well.
Doubt appears when you have not mastered the basics of your strategy and have no idea what to expect or how strong of a signal your strategy presents in front of you. To build such confidence be sure to always back test. You can do this by either going back in time on the charts and identifying opportunities that your trading strategy would have worked or using a demo account for a while to see test out how your trading strategy would work in real life scenarios. Once again I recommend you use WikiFx to find an appropriate broker to register a demo account under. You should find a broker who will allow you to set the initial account amount to the amount you will be able to trade with when you deposit so that you can manage your expectations when now trading with real money. Do not skip this step. It is your opportunity to get to know your trading strategy.
