Psychology is very important in trading. In fact the number one factor behind the successful trader.
If you have average strategy and a good mindset and skillset (called psychology) you can win from market.
Psychology is not about how you place sl and how you manage risk reward. It is more than that.
It is of understanding of market and their nature to control yourself in not taking wrong trades and main thing is to protect your capital.
So psychology protects the capital. That is why most successful traders is able to earn from market.
And those traders who are in loss have not been able to manage their psychology and makes wrong trades and loose capital.
So, capital protection is all about taking proper sl and gettin target and increasing the profit. Managing the number of trades and with their sl and target or able to exit in the target.
So, now i will list psychological points that you need to master in order to be successful in trading,
- Psychology of money
- Good emotional control
- Have strong psychology in profit and loss
- No emtional, revenge trading
- Rule based trading, zero emotional and psychological trades
Psychology of Money
Money psychology is all about how money moves in candles. Like it is of candles top, bottom, average prise and response of the market to particular prise or level.
When a trader knows this, he understands where to take risks and where to avoid the risks. Because he knews the important prise levels.
Good emotional control
What is good emotional control. When you are in loss or when your thinking isnt work out then also you will able to make good decisions like avoiding overtrading and not taking trades untill the market comes to your conditions properly.
Emotions are high during the trades. It increases when market is not moving your direction. As there is no control over the market directly or indirectly. So that is why the emotions are increases rapidly. As body goes into fight or flight response. Untill there has been a bearable loss body and mind remains in fight mode to survive, when loss pass the bigger limit, emotions goes into freeze mode. Realizing big loss and end up the trading for that day.
It is mental and emotional response of your body while handling the stress of trading.
Actually it is a wrong way, good way is to take 3 to 4 a day with proper analysis and proper risk management. In this case, even though you have 2 trades loss then also there will be 2 good profitable trades. Then unnecessarily overtrading continuously and losing money withing short period of time. This is refer as gambling.
Rule based trading
In trading, when you take trades. You take only on the basis of certain patterns that predict the moment that are called rules or conditions. Right. This is called as rule based trading.
This prevents low quality trades. Always try to have two confirmation before entering a trade. This increases chances of winning trades. This is how you will be successful in trading.
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