Control Your Emotions While Trading
It is not so easy to overcome the psychological problems in trading. It requires time, experience and endless effort to develop a positive mindset for the trading. Without overcoming psychological problems, you will not be successful in the long run. To overcome psychological problems, one should follow the steps.
Follow the Below Step to Overcome Psychological Problems
1. Forget the Money
You should focus on the trades rather than money. In this way, you can avoid many major psychological problems such as fear and greed. It is hard to maintain proper trading mindset if you keep thinking that your hard earned money is at stake. It is better to focus on the improvements of the trades rather than counting profit or loss.
2. A commitment to a mission
A successful trader should have a plan to achieve the goal. In many cases, traders develop a plan to achieve the success, but after some time, they fail to follow the plan correctly. That happens due to psychological interference in trading. You should be confident and brave enough to follow the plan of your mission to achieve success.
3. Result in Real Time
Many traders believe that forex market is the place where they make loads of money with the less effort in no time. This is the unrealistic reason. Due to this type of behaviour trader becomes victims of psychological problems. This is why you should focus to achieve the measurable and the realistic goal with patience. It will keep you away from the psychological problems.
4. Self-management through self-mastery
You should have a clear understanding of the personality and mindset to know about the psychological problems which trouble you most. Then you should provide a continuous effort to overcome these psychological problems. Only then you will be able to manage your emotions positively.
5. When in suspense, stay out
You should be confident and positive about what you are doing; otherwise, fear and greed might grab you intently. When you are troubled about any trading decision, then it is better to stay out. There is no point of opening a trade when you are confused about it.
6. Never trade or invest based on belief
There are lots of examples of holding the losing positions only because of the belief. The most probable result of this situation is either a massive loss or margin call. Traders even let winners turn into loser due to the mindset.
7. Perform on your judgment
There are many external forces influence traders to violet their trading strategy or rules. A successful trader should have the confidence to follow his analysis and trading strategy completely. Successful traders perform on their own judgment rather than relying on others. It is your money so the decision should be yours.
8. Do not over trade
Some of the traders are too excited to trade that they break their trading strategy or rules and trade frequently when there is no entry signal. Its situation will lead a trader to a loss of perspective, considerable transaction costs and a substantial amount of mental stress.
9. Do not jump into a trade
Entering into a position before entry signal is always impressive and tempting. This is a poor practice as it explains that we have a lack of discipline and not following the trading strategy.
10. Define your risk first
Before entering into a position, a trader should define the risk tolerance level. A stop loss can save a trader from getting ruined, so a trader should determine his stop loss before entering into a position.
11. Cut the loss and let the profits run
This is a very well known rule for the technical analysts. It is the most important rule for the traders. A trader should minimize the loss as much as possible but use the risk management techniques. On the other hand, traders should maximize the profits as much as possible to cover up all the small losses and to be on the winning side even after losing in some trades.
12. Invest money that you can afford to lose
Never invest that much money, which you cannot afford or bear losing. Traders often invest almost all of their money to make good profits. Trading has the chance of both winning and losing. In forex, 90% people lose their money. So you should not invest too much money, which risk you cannot bear. Losing a significant amount of money may lead you to many psychological problems.
13. Do not fight with the market
You cannot move the market in your desired way, but you can follow the path of the market. If you trade against the market to move into your desired way, then you will probably end up with loss and frustration. On the other side, by following the market, you can make the profits easily if you trade in a disciplined way.