Trading Expertise: You Think You Know it All?

Don’t Miss-out the Most Essential Ingredients of Successful Trading

Trading is, no doubt, a risky affair as your trading proficiency doesn’t just depend on your practice and experience, but also on how you handle the situation psychologically. More often than not, even the most successful traders are trapped in the three deadliest deeds in markets- overtrading (when you continue after your target is achieved!), revenge trading (when you turn around and trade when your stop loss is hit!) and impulsive trading (as you all might know- when you take action on spikes without research!). Most trading mistakes go far less noticed, especially when it comes to learning from mistakes. But before you master the art of keeping away from such mistakes, it is essentially important to understand the psychological reasons behind these slip-ups.

Your trading overpowers your psychology as much as your psychology overpowers your trading. Start working on your psychology if you want to make more profits than losses in trading. Emotion in trading is often termed as trader’s fog that blinds the trader and makes obvious market patterns too small to see. But what sets fire to these trading emotions? There are several factors.

Let’s brief it down for now and take a look at some of the most important ones-

#1 Trading Losses

It goes without saying that when personal market analysis and individual predictions don’t work out right, the trader tends to get puny in trading.

#2 Pressed for Time

Traders often find profits and gains too fast to evaluate during trading hours. The volatility in markets, price ticker busy racing up and down, and instant news flash makes trading sessions appear shorter than required makes the trader rub the wrong way, eventually making them emotionally pressed too.

#3 Trading-Investing Muddle

Often, day traders do hold their positions overnight, and sometimes even for a length of time; considering the position to be fruitful for investing. They often forget that their strategy in buying was based merely on its momentum and not on its future prospects; realizing when it’s already too late.

#4 Exiting At Low Margins  

Sometimes, a trader’s strategy works well but the target setting needs to be improved. After considering the brokerage charges, income tax and expenses of the professional trading terminal, the trader ends up distressed.

#5 Ditching your Strategy

When a trader does not stick to the strategy s/he had built for a particular trade, just to fall upon losses, s/he not just losses the financial capital but also the psychological capital.

These 5 triggers for psychological imbalance in trading are as important as the 5 Vitamins That Make Healthy Trading we will discuss in the upcoming post.

Till then, control your trading emotion and don’t forget trading is a profession, not love! And even if it is, you better be rational now than deserted later.

Bonus Tip: Don’t forget the 3M’s- Right Methods, Markets, and Mentors!

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