Trading is a very exciting activity.
However, such excitement is the root cause of disturbed trading psychology.
The only trouble is that you can hardly feel excited and earn money simultaneously!
Such trading is more like a casino, where players simply have fun with free drinks while the cold-blooded croupier empties their pockets calmly and with dignity, just like on the stock exchange.
However, to achieve real success in trading, a fundamentally different approach is required, and we will try to figure it out with this …
Fear of closing a position on a stop loss
The usual reason is traders’ fear of failure, as they mostly do not risk a small, predetermined amount.
He feels he cannot bear another loss. And in the end, it averages out until the entire depot is liquidated.
For me, it was the most difficult thing I encountered.
Until I realized that the ABILITY TO CLOSE BY STOP IS THE MAIN THING IN ANY TRADING STRATEGY, nothing was very easy… after you cut the stop, your trading becomes profitable.
Exiting profitable trades too early
Too much emotional involvement and emotional dependence on the result. In this case, there is strong anxiety, which is removed when the position is closed.
Fear of the market turning against the position and, as a result, intolerance for feeling disappointed. The need for instant satisfaction, getting what you want.
Adding to a losing position (averaging)
Unwillingness to admit that you may be wrong.
The hope is that the price will return and that the forecast of its movement will still turn out to be correct.
And here again, the ego of the trader is hurt.
The usual reason for this is that the trader is afraid of his own failure and not the loss of some, a small and predetermined amount.
He feels he cannot bear another loss.
For me personally, this is the most difficult thing I have encountered.
Until I realized that this is the main thing in any trading strategy, everything was not very good)) after you cut the stop, your trading becomes profitable (provided that the trading strategy is built correctly)
Too early exit from profitable trades
Excessively large emotional involvement and emotional dependence on the result.
In this case, there is strong anxiety, which is removed when the position is closed.
Fear of the market turning against the position and, as a result, intolerance to feeling disappointed. The need for instant satisfaction, getting what you want.
Strong emotional involvement in the process of trading
In some cases, it may indicate a possible problem with gambling. Such a trader experiences a strong, unbearable desire to be in the market all the time;
Limitation of profit
A feeling of undeserved success. An inner belief is that you don’t deserve to be successful, have money, or make a profit. This is usually associated with low self-esteem;
Not following a trading system
You don’t really believe it works. You haven’t tested your trading system well enough.
It may not match your personality.
You want to get more excitement in trading and more adrenaline.
You don’t trust your ability to choose a successful system.
A trading strategy is a very important aspect of trading.
I went through a sufficient number of them (from 5 pieces), and only after that did I develop my own!
Exceeding position size
Unfounded daydreams and dreams that trading will definitely be profitable.
“Magic Thinking”
The risk is not fully understood, and there is no understanding of the importance of competent money management.
Refusal to accept responsibility for risk management.
Overtrading
The desire to “conquer” the market.
Greed.
An attempt to get even with the market for the previous loss.
Excessive emotional involvement in the trading process.
Greed! I started earning more when I conquered greed.
Fear of trading
There is no trading system. Trading is carried out for “good luck.”
Poor risk tolerance and fear of the unknown.
Fear of total loss of all funds. Dependence on someone else’s opinion, fear of looking like a loser in other people’s eyes.
The desire to control everything, including what is impossible to control by definition;
Irritability after a trading day
Emotional swings are caused by anger, fear, and greed.
Too much importance is attached to trading results, in contrast to the process, which seems difficult and exhausting.
There is no professional development, mastering trading skills, studying markets, and new trading tools.
Too much focus on money.
Unrealistically high trading expectations.
Lack of specific goals in trading, lack of a financial plan;
You can’t afford to lose
Trading on borrowed funds or family savings is a bad choice.
Indisciplined trading has no chance of success.
“The key to trading success is emotional discipline. If intelligence were the key, then many traders would make money trading… It will sound like a cliché, but people don’t make money in the financial markets because they don’t cut their losses.“