Psychology Of The Winning Trader

Psychology Of The Winning Trader



Psychology Of The Winning Trader
It is​ said that nine out of​ every ten traders loose money .​
It is​ also said that day trading is​ seventy five percent psychology and the other twenty five percent divided up between your trading system and proper money management .​
Now I​ do not know if​ those facts are true or​ false .​
I​ have never seen a​ survey published on the topic, maybe someone can help me with that information, but let us assume that if​ it’s not absolutely true then it​ is​ nearly true .​
This would mean that most traders are lacking the proper psychology for trading .​
Therefore we need to​ look very carefully at​ this business of​ our thought patterns, what we are thinking while we are trading .​
All our actions are governed by either pleasure or​ pain .​
Whatever we do, we do it​ to​ either to​ experience pleasure or​ escape pain .​
We have a​ need to​ avoid pain and a​ desire to​ gain pleasure .​
We need to​ do some introspection and decide what is​ it​ that drives us while we are trading, pleasure or​ pain .​
Do you jump into every trade even when the setups are not quite right because you just cannot stand missing the next big move, not having the pleasure of​ the winning trade .​
Fear will probably cause you to​ not enter trades when everything looks perfect because the chance of​ loosing money is​ just too much for you .​
So you sit there paralyzed, or​ you enter the trade but your stops are so tight you hardly ever make any money .​
Most traders I​ believe associate trading with pain .​
They are ruled by fear .​
The fact is​ that every trader looses money .​
It is​ part of​ the game .​
It’s how you deal with it​ that matters.
If we associate pleasure with every winning trade and pain with every loosing trade then our trading career will be an​ emotion roller coaster ride of​ up and down feelings .​
This is​ the very heart of​ the problem .​
Most of​ us are emotional traders .​
Our psychology has associated winning with pleasure and loosing with pain .​
The problem with this is​ that in​ day trading we will experience a​ number of​ winners and losers everyday .​
If you start the day with a​ couple of​ losers you will begin to​ hurt, which causes fear and when the next setup comes along your fear level is​ too high and prevents you from entering the trade, That trade just happened to​ be a​ winner and you missed it .​
Now you are really going to​ pieces .​
What can we do to​ overcome our emotions?
We have to​ change or​ psychology, change the associations we have formed of​ pleasure equals winners and pain equals losers .​
The first thing is​ to​ set goals for our trading and our goal should be consistent profitability .​
What are our monthly and our yearly goals? Use points or​ pips instead of​ money .​
Secondly, we need to​ know what is​ preventing us from achieving our goals .​
is​ it​ fear of​ loses, incorrect position sizing etc .​
Look at​ what you are doing and why it​ is​ not working .​
We now need to​ break that pattern of​ behavior and install a​ new pattern .​
How do we do that?




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