PSYCHOLOGY
*Deepak Chorpa says that “all relationship is a reflection of your relationship with yourself.” Psychology has a powerful impact on trading results. It is impossible to separate your psychological makeup from your results. Being aware of the way your mind works is the first step. You must know your own strengths and weakness before your can hope to grow stronger and to overcome the obstacles.
The currently recognized version of the sins are usually given as wrath, greed, sloth, pride, lust, envy, and gluttony.
Remember, the first time you placed a trade and because your best research led you to believe that the stock was going up or down. What happens if the stock moves in the opposite direction instead? The obvious comment here is you were wrong, plain and simple. But, Your mind goes into hyperactive mode. Chasing the trade (In and Out) Over-trading, Holding Overnight. As the Green and Red flashes on the screen goes by, you experience the panic and stress of losing over 40 percent of your account in three minutes. If you really want to get your blood boiling all you need to do is watch your profit erode tick by tick by tick as you place an order an on your computer only to find out that there servers are busy and your order status reads “Pending” for the next ten minutes. Successful traders have to find ways to reduce the stress of commonly associated with trading. Don't fall into the trap of feeling that you can't get this business. To create your own plan, examine the following three-point outline.
MANAGE YOUR LOSSES TO PROFIT CONSISTENTLY
This dynamic environment borders on schizophrenia, where the bulls and bears do battle trying to out guess each other. Each price move (tick) rearranges everyone's assumptions about what the market is about to do. One of the greatest attributes in any industry is the ability to change direction when a roadblock is reached. Traders must also exhibit this flexibility if they are to survive in the marketplace.
Your trading goals should be as realistic as possible. This is no secret. Unfortunately, that old maxim “cut your losses and let your profits run” is easier said than done. If you are losing money, sell before you lose any more of it. Or the strategy you have adopted is the “Hope Strategy”. Decide how much you can afford to lose and put a limit on your losses. Your profits should more than compensate for your losses. Keep in mind; the stock price will fluctuate throughout the day. You don't want to owe the market for your time an effort.
MAINTAIN A BUSINESS DISCIPLINE
This is your business. Apply self discipline to your business. Show up, be prepared, be productive, and be professional. The difference in a “Job” and “Trader” is the fact a job is passive income and the other is active. Meaning a “Job” you show up and they pay, whatever they feel your time is worth. No matter how long the hours are. As a “Trader” your income is active this meaning that unless you report to your trading desk, you will not make a dime from trading. You have to make a trade you herbs.
MAKE A COMMITMENT TO YOURSELF
This specialization allows the trader to develop strategies that consistently work in certain recognizable market conditions. Continue to broaden your market knowledge and experiment and refine the strategies that work for you. Competition brings emotion into an already emotional atmosphere. Know the style of trading that fits your personality and lifestyle, and compete with yourself to become a better trader.
CONCLUSION
Psychological make up of the market is made up of people, and people are creature of habit. The markets will always change. Noting is permanent. Remember, patience and persistence will help you to succeed. Just as success is an attitude, trading is a discipline.
