Trading Psychology And The Skills For Becoming A Successful Trader

Trading is a very popular phenomenon nowadays and a lot of people are becoming involved in it, mostly with the anticipation of generating their finances. It should be also mentioned that trading is not an easy process, vice versa, it is very complex and requires not only special skills and working hard but also there are some secret psychological tips that it is good for the traders to take into account before actually becoming a trader. It is also true, that there is no special formula for becoming a good trader and everything is individual, this is why we see the majority of traders failing throughout the process, however, the specialist has been observing the activities of the traders and have made several important deductions about their habits, that might appear to be quite a handful for making the process more efficient than otherwise, it would have been. 

successful trade

Trading psychology – explained 

To explain it with easily understandable terms, trading psychology is a broad phenomenon that includes all the emotions and feelings that a trader may encounter during the trading process. The reason why the specialists started paying attention to this process is that some of these emotions or feelings are quite helpful during the process, while others, such as fear, nervousness, anxiety are the ones that decrease the efficiency of the trading process. It is a very complex process and in order to master it, a trader needs a long-time experience as well as dedication to it. 

It is more likely for the trader to encounter the feeling and emotions that are affecting the process negatively than the positive emotions. These negative aspects might be the closing losing trades prematurely when the trader fears about losing more or doubling down on losing position in anticipation to balance out your previous losses. 

One of the main fears that appeared to be a characteristic of the majority of traders is fear of missing out, also known as FOMO. When the market reverses and swings in the other direction, parabolic increases attract traders to purchase after the move has peaked, causing a lot of emotional tension. Traders who are studying others’ failures and take advantage of positive aspects rather than negative ones are the ones that are capable of becoming successful, then the others. 

The basics of trading psychology 

After observing the emotions and feelings of the traders who are actively involved in the process, psychologists became able to outline some major psychology tips for Forex traders or traders in general. Taking all those tips into consideration can be one step forward to the efficient trading process. 

Managing emotions – there are many different emotions that the trader might experience throughout the process of trading, for example, fear, nervousness, excitement. When the trader becomes able to control these emotions and make decisions without anxiety or fear, this is when they become able to grow their trading profile and make it more profitable. 

FOMO – this emotion should be identified and surpassed at a very early stage, how difficult it might sound. The first thing for that to remember is that there will always be another trade and should not risk the capital that they will regret in several hours or even minutes. 

Trading mistakes – there are a number of trading mistakes that all the trader makes during the process, this can be trading on several different markets, setting inconsistent trading sizes, and overlapping. Making a mistake is very easy but a good trader should make this mistake as a lesson for the future and try to understand its causes on a very deep level. It will help in the future to avoid such mistakes. 

Overcoming greed – this is one of the most common emotions among traders that deserves special attention. It is very unprofitable for the trader to overcome the trading logic, this is when everything does not follow the trading plan. For example, sometimes the traders are tempted to use excessive leverage and take a risk in order to balance out the previous losses. 

The mindset of the successful trader 

There are thousands of traders on the financial market but with different portfolios. Some of them managed to overcome difficulties that are always with the trading process and become successful, but some of them did not manage to keep up with the process. We already have a prototype of successful traders, what are their advantages or secrets for being successful, and making them as your advantages might be beneficial for the future trader as well. 

  • Bringing a positive attitude to the markets every day. This might sound too general, so keeping your emotions positive can be difficult, especially after successive losses. A positive attitude will help you to keep your mindset clear from negative thoughts. 
  • Put aside your ego. You should accept that there might be more successful traders on the market than you are, but what should interest you more is to make your average winnings overcome the average losses. 
  • Do not trade for the sake of trading –  not all the days will be full of trades. In one day you might have 15 or be left without placing the trade for two weeks. There are a lot of aspects that are influencing the financial market and it cannot be stable for the whole period of time. 

Thus, analyzing the feeling and emotions that are affecting your trading process is crucial for your successful moves and the best way to achieve your goals is to study from others’ mistakes and make your trading plan and strategy as unique as possible. Following the plan without making emotions involved in it is the key to future success.