I see many traders who have strong aspirations of becoming a great trader and making lots of money fail because they blow their trading psychology. Let’s take a look at 3 of the worst mistakes traders make with trading psychology, and then what to do instead. Today our focus article topic, these 3 psychological mistakes will ruin your trading is meant to help you identify these mistakes and show you how you can fix them.
Mistake #1 – Ignoring Trading Psychology Until it is too Late
This one is really easy to do, especially since most people think trading is all about the setup. Certainly, possessing very strong technical skills is a critical component of trading success. But so, too are understanding sound money management and developing solid mental skills for trading. I’ve actually coached many traders who don’t start to learn about trading psychology until their account is nearly wiped out or they have become so fearful of taking another loss that they just can’t pull the trigger!
Waiting so long is not a professional approach to trading. Doing so prolongs the learning process and can leave the trader frozen like a deer in the headlights if they have been trading unaware of how their psychology can hurt them.
How to fix it
Every good trader knows that psychology is an important part of the trading game; it’s in every serious book on trading. Focus on your own trading psychology. Start to learn the mental skills needed to trade well right away. Make time available each week to work on your personal psychology. There are many helpful trading psychology resources available to a trader, including links to my website and blog, which you will find below.
Mistake #2 – Thinking you have to Control and Suppress Strong Emotions to Trade well
This just isn’t true. It’s also not possible. Yes, you can influence your emotional state and sometimes override you emotions, but to consistently control fear, for example, just isn’t possible. Even traders with 20 years of experience still feel uncomfortable when putting on a trade. Why? Because trading is an environment of uncertainty. We never have complete information. Every trade is about taking a risk.
We are human. We have innate emotional mechanisms that will absolutely trigger when we take on risk. We don’t have much control over them.
How to fix it
Be open to and accept the fact that, yes, you will feel anxiety, fear and other strong emotions at times. Note that these emotions never last. They feel bad and definitely are uncomfortable, but the fear you felt this morning has left you by the afternoon, if not sooner. Emotions come and go. They are not permanent. The real secret to trading psychology is to be open to them and do what matters for the trade. This is not always easy, but there are skills and techniques that you can learn that will, indeed, make it easier.
Mistake #3 – Struggling with Your Emotions
This is the worst thing to do. When you struggle with your emotions, you take your focus off the market and put it onto your internal state. Attention goes to the scary feelings, muscle tension, pounding heart, and a mind that is telling you to get out of the trade or do some other action to reduce the discomfort. Attention is not where it should be. No one can manage a trade without focusing on it.
How to fix it
This builds on being more open to uncomfortable feelings and thoughts. Know exactly what is needed to manage the trade. Know where the profit target is, and what the trade will look like if it is working. It is helpful to imagine this in your mind’s eye ahead of time. Also know what it will look like if it is not working or something arises that would cause an early exit. Then, keep your focus on these factors rather than your internal state. This is maintaining composure under pressure.
Keeping composure while trading is just one mental skill, there are other important trading psychology skills a trader needs to know. Get yourself enmeshed with these 3 psychological mistakes will ruin your trading and you will see how your trading profits will improve.
Article Source from Ezine Articles