Mastering Trading Psychology: Overcoming Failures and Embracing
Hello, friends! I'd like to discuss with you the situation of our failures in trading. What causes them and what to do about them in the future:
1) Traders that go into the market don't accept the risk they are putting on when they get into a trade. Traders who trade based on their PnL and not their strategies. Traders who are afraid to take a loss and see red in their account or their positions. When you trade from a place of fear(losing money), and not from a risk standpoint, your mind will mess with you, and it will destroy the psychology that is needed to become profitable.
2) Fear-based traders worry about their PnL more than the actual trading setups that are presented to them. They base their decisions on emotions and are the type that end up chasing moves from FOMO, whether it's long or short. They hold losers too long hoping they turn around because they're fearful that if they cut the trade, it will turn in their direction. They chase moves out of FEAR that they'll miss the move.
3) A risk-minded trader understands that they will inevitably be wrong at times and take losing trades. They respect when they're wrong and cut the position. No fear about it. Purely risk management and understanding you are not correct 100% of the time.
Now, let's move on to the conclusion: You can't win or lose a trade; your task is to run a marathon. And that is the MAIN RULE!
Let's talk about books now. Numerous books are available, and I select the ones I consider the best.
Reminiscences of a Stock Operator by Edwin Lefevre. 100 years old this year and an absolute classic
Dynamic hedging by Taleb
One Good Trade: Mike Bellafiore
It's a good book for beginners, emphasizing discipline, and risk management and vibe of trading journey.
That's the end of this story, traders. I would like to read in the comments below your thoughts and ideas! Let's keep charting!
1) Traders that go into the market don't accept the risk they are putting on when they get into a trade. Traders who trade based on their PnL and not their strategies. Traders who are afraid to take a loss and see red in their account or their positions. When you trade from a place of fear(losing money), and not from a risk standpoint, your mind will mess with you, and it will destroy the psychology that is needed to become profitable.
2) Fear-based traders worry about their PnL more than the actual trading setups that are presented to them. They base their decisions on emotions and are the type that end up chasing moves from FOMO, whether it's long or short. They hold losers too long hoping they turn around because they're fearful that if they cut the trade, it will turn in their direction. They chase moves out of FEAR that they'll miss the move.
3) A risk-minded trader understands that they will inevitably be wrong at times and take losing trades. They respect when they're wrong and cut the position. No fear about it. Purely risk management and understanding you are not correct 100% of the time.
Now, let's move on to the conclusion: You can't win or lose a trade; your task is to run a marathon. And that is the MAIN RULE!
Let's talk about books now. Numerous books are available, and I select the ones I consider the best.
Reminiscences of a Stock Operator by Edwin Lefevre. 100 years old this year and an absolute classic
Dynamic hedging by Taleb
One Good Trade: Mike Bellafiore
It's a good book for beginners, emphasizing discipline, and risk management and vibe of trading journey.
That's the end of this story, traders. I would like to read in the comments below your thoughts and ideas! Let's keep charting!
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.