#TradingPsychology
#Why_It_Matters #Psychology #In_Trading
Even with a perfect strategy, you may be defeated by your emotions!
-Fear: Drives you to close trades early or miss profitable opportunities.
-Greed: Makes you continue in losing trades hoping to recover, or take excessive risks.
-Regret: Like clinging to a losing trade because you invested a large amount.
-Common mental mistakes to avoid
1. **Confirmation Bias**: Seeking information that supports your opinion and ignoring warnings.
2. **Overconfidence**: Excessive trust after temporary success, leading to uncalculated risks.
3. **Loss Aversion**: Fear of loss may cause you to close winning trades early!
-Psychologically successful trader traits
- Discipline: Commitment to a specific plan even in the height of market volatility.
- Flexibility: Accepting losses as a natural part, without despair or seeking revenge on the market.
- Patience: Waiting for clear opportunities instead of "trading just to trade".
How to build a professional trader mindset?
1. Create a clear plan:
- Define entry and exit rules, and the allowable risk level (example: do not risk more than 2% of capital on a single trade).
2. Use a notebook:
- Write down details of each trade and your feelings during it; this will help you discover your negative patterns.
3. **Practice Risk Management**:
- Stop Loss and Position Sizing are your shields against emotional decisions.