Hey Guys!
Here I would like to bring the most important thing you should be known before entering the trading field, that is “Your Psychology”
In the entire article, I am discussing the most important concept “Trading Psychology”
Here I am giving the complete details on the important psychology that a trader should possess.
We don’t believe that you have to be very intelligent to become a successful trader; but, there are certain qualities & techniques that one must want to learn before entering into this vast world of trading.
When you thought about the first time you want to become a trader, what was the first question that came to your mind?
It may be any one of the following.
What personality” traits should I have to become a successful trader?
What kind of attitude I should have towards the markets?
Is it necessary to have good knowledge about fundamental and technical analysis before entering the markets?
Who can become a successful trader?
What kind of strategies I should adopt to make money?
The first thing you need to do is to inculcate some of the qualities in yourself.
We believe anyone can become a good trader but the following are the important psychological traits that a trader should have.
Passion
The first thing that a trader should have is the big word “Passion”.
Passion is something that reflects in your personality, in your communication, in your attitude and behavior.
If you are passionate about something you start enjoying it and it doesn’t remain your job or profession anymore but it becomes part of your lifestyle.
There are people who sit in front of the market since the opening of the market till its closing on daily basis. Many times they don’t do even a single trade in the whole day.
But if they don’t sit in front of the market for few hours or a day, they feel that there is something missing in the routine. That’s the passion about the market.
If you are watching the markets on a consistent basis, you become a better decision maker. You are a better judge of the market even better than the experts. It’s always exciting to deal with the numbers.
“If reading and understanding numbers is your passion, you can become a good trader.
Any average person with a little bit knowledge about the stock market can become a successful trader.
Trading is a competition; anyone who follows discipline and keeps a continuous watch on the market emerges as a winner.
Remember one thing if you feel you are stuck in a wrong position you need to hit your out (stop loss) immediately. Investors can make money only on one side of the market/stock whereas, a trader can make money on both sides of the market; they just need volatility on either side.
Confidence
Always the next big thing is ‘Confidence’ to be successful.
You should have confidence in whatever you are doing. “Sometimes you may be right sometimes you may be wrong. The most important thing is the execution and for execution confidence is the most important quality.
Especially for a trader; confidence can turn you to be a victor. Lack of confidence will lead to doubt, second- guessing and you will miss out on various opportunities to make profits.
It also leads to frequent losses; when you create a position after a long wait, you may be in a wrong position and that will force you to exit. You must believe in ‘yourself and your decisions’ to become a successful trader.
In trading fast and wrong is right and slow and right may be wrong.
Here statement says that if you are confident enough to hit a position, you should hit it immediately otherwise, you will be late and you may be picking up tops and bottoms of the stock.
If you are wrong, you always have the option to hit your out (stop loss) losing a couple of bucks.
You should be fast enough to create the position at the right level and if you are wrong you should hit your out (stop loss) faster. That will help you to control losses and protecting profits.
If you are slow and create a position after a long wait, you may have already missed the move.
After creating the position you will not be able to hit your out as you are slow and can’t make a decision quick enough, which will lead to ruin.
Confidence will help you to create the position at the right levels and hit the out (stop losses) with minimal losses if you are wrong.
So always remember: “In trading fast and wrong is right and slow and right may be wrong”.
Discipline
Discipline in trading can help you to be consistent.
Every game has some rules; on the similar lines trading is also not an exception.
Exercising discipline even in worst of the times can keep you out of the big trouble. There is a routine that you need to follow till you are part of trading.
Do not allow emotions like ‘fear and greed’ affect your trading decisions. You should be in the market at least half an hour before the opening of the market.
Do the necessary research to keep yourself updated with any major event or activity which is going to happen during market hours and which can affect the volatility in the market e.g. interest rate decisions, fed announcements, inflation, future and options expertly and earnings etc.
Every day you should be ready with three stocks which you are going to trade today and find the important information on the same.
When market opens in the morning you should be watching those stocks if those stocks don’t move then you should go ahead and look at the filters (high and low) for stock selection.
It takes some time to follow the system in a disciplined manner. You should avoid mistakes and do the things as simple as you can.
Decisiveness
Market continues moving, it does not wait for anyone to take decision. Therefore, you need to be very-very fast in your ‘Decision-Making’.
“Decision needs to be timely on both the sides either on developing a position or getting rid of the same.”
When you are in the market it’s not needed that you lug a position constantly, you need to rest like a mercenary guerilla and wait for the best chance to make a trade.
There may be couple of trading possibilities where you can make profit as well as several trades to make loss, however consistently remember that your losses must be very limited so that it does not take up all your earnings.
In some cases market is stuck in a variety and you are unable to go into a trade, so you make two or 3 sell the entire day and shedding or making a number of bucks.
These days are considered as learning curves which will eventually assist you to come to be a far better decision-maker in the long-run.
Do not go into a trade without a reason. When you develop a position, you need to be sure of 2 points; one reason for the entry and also second out (quit loss).
Every-time you cannot be right to judge a profession so if you are wrong favorite your out (stop loss) immediately without any worry.
For that reason making a decision the out (quit loss) is similarly important as factor of entrance to a field. “When you create a position with a factor, hold on to your nerves; but constantly remember you may be incorrect, market is always best.”
Capacity to Accept Failure
Excellent traders understand that several of their fields would certainly not go as per their assumption. However, they likewise know that nobody else should be criticized for a bad trade.
A good investor takes credit of all his fields whether great or bad.
Never ever before use the language of an unsteady trader:
• Market is extremely uneven today.
• Every time market goes against me.
•Why my stocks are stagnating with the marketplace.
• Instead of all great signals market is not going sturdy and more ...
Being an excellent trader you ought to prevent all this.
Do not beverage your head and consistently stick to the fundamentals of the trading. Don’t attempt way too many points.
You cannot condemn the marketplace or any individual else for your losing fields.
It’s simply you who is to be condemned or appreciated for bad or great fields. Following trading rule would aid you to hang on to your nerves as well as at some point emerges as a successful investor.
“If you made a bad trade, neglect it; if you made a good profession, neglect it
quicker as well as go on relocating till the market is on.”
Capability to Accept Risk
An investor is comfy with ‘Risk’ and readied to shed money from time to time.
If you are afraid to lose cash, then day-trading is not your cup of tea.
Danger is associated with every activity in day-trading. When you produce a position, there is always some risk associated with it.
All the golden policies of trading carry threat with it e.g. “A great trader is never worried to buy a stock which is attacking brand-new highs or sell a stock which is attacking brand-new lows.”
Specialists in trading claim that keeping an out will certainly aid you to safeguard your cash which will at some point aid you to make revenues.
Taking computed risk as well as keeping sheds controlled is the mantra of success for any kind of day-trader.
“People misconstrue equity markets; they believe that market could understand their sentiments; however they forget that the market is the outcome of beliefs of countless people around the globe.”
Determination
Excellent day traders do not hurry right into trades. When they enter, they hang on their nerves as well as wait for the maximum revenues.
Patience is called for in both the disorders:
- When you are making a position.
- When you are in a position.
Here keeping perseverance doesn’t indicate wait for a very long time as well as develop a position.
You should constantly have a reason for going into a field. You cannot keep a position and miss all various other trading opportunities that already existing out there during that time.
When you get in a profession consistently keep an out (a quit loss) as well as do not worried to take that out (stop-loss), if you are incorrect.
If you are right, wait till that stock shows indications of trend-reversal or you can go on altering you’re out with stock motion in your prefer i.e. tracking stop-loss.
Focus
Trading is a competition of concentration as well as assertiveness.
You should sit in the marketplace since the open of the marketplace till its closing without any interruptions. Throughout this period a trader have to take in, assess and also perform bunch of real-time info.
There are lots of trading opportunities that already exist out there, you have to capture few of them and make a bunch of money.
The success of an investor relies on how well he could avoid distractions as well as keeps attention even when the marketplace is boring. You need to be in the market when you have a position and you should exist also when you do not have a position (to execute the available chances).
Hope you enjoyed reading the article, and do apply the Trading Psychology as and when it is needed in the Trading.
Do like, comment and share if you found the article useful.
