#TradingPshchology
Rational trading is a trading style based on logical thinking and calm analysis rather than emotions and impulses. This is what distinguishes a successful trader from an impulsive one. Here are the elements and fundamentals of this type of trading:
1. Commitment to the plan
Before entering any trade, there should be a clear plan (where to enter, when to exit, what is the stop loss).
Do not act based on "feeling" or fear of missing out (FOMO).
2. Wise capital management
Do not risk more than 1-2% of your account on a single trade.
Maintain diversification in trades to reduce risks.
3. Dealing with profit and loss maturely
Do not rejoice too much in profit, nor be sad or angry about loss.
Losses are a natural part of trading, and the rational trader learns from them.
4. Self-discipline
Trading is not gambling; it is a plan + commitment + patience.
Ignore psychological pressures from the market or from others.
5. Continuous learning
The rational trader does not stop learning and knows that the market is always changing.
He evaluates his previous trades to understand what worked and what did not.
6. Using analysis, not rumors
Relies on technical or fundamental analysis (or both), not on channels or unstudied opinions.
Practical example:
If a trader enters a trade and the price starts to drop, the emotional trader may hold onto it hoping for a rebound, while the rational trader executes the stop loss immediately because he adhered to his plan.
