Trading Psychology 101

Trading psych is the elephant in the room for many traders. They have a good system, yet can't control their emotions. Trading psychology has many aspects. From when your new to trading and see price jump 30 pips then hit the buy button just to see it come back down, which is "fear of missing out". to being in a good trade seeing it go into target profit, and get greedy, just to see it reverse and stop you out. Other aspects like being greedy and over trading, or using too big a trade size for your account. Or being fearful at taking profit after price moves 2 pips, of failing to place a trade. Some traders want to be right all the time, even when price start going against them.. and they add to positions when they should be exiting. Even trading while tired, has big effect on performance. Some crave the excitement of winning or losing and don't wait for proper signals.
some tips that I have found useful.
1. Do a daily journal of how the day went. Write it, don't type it. Record why you didn't follow your system to Identify "triggers"
2. Get enough Sleep (its proven that trading tired decreases performance)
3. Don't use a lot of Red on your charts. Red is a very emotional color and can trigger emotional responses.
4. If Something is triggering a misbehavior, take note of your breathing.. Taking a few deep breaths often lets it pass.
5. Mentally imagine your trade, and what could happen and what your actions will be.
6. Be aware of times which case you great loss. NFP, FOMC and avoid them.
7. If you have a good backtest of your system, you know it will example: win 65% and lose 35% expecting the 35% loss can make it easier to take.


Discuss any trading psych problems, tips, tricks, books, youtube videos, methods, facts you find interesting or helpful.

This list is a good start.

An interesting point about the colour RED. Hmmmmmmm

PM1

I also find when my stop loss is hit that we still have the rest of the month to make up for it that helps ease the pain. Only frustrating thing is it takes more time 1 loss = 2/3 days to make it back plus profit.

I disagree with you there; most retail traders do not have a good system; even if they do, they generally don't back-test it well enough to have faith in its edge, understand its drawdown behavior, etc.

Profitable traders trade their (proven) systems. Marketers sell "psychology" as a cure-all to newbies.

I couldnt be disagree that psychology is the important part. actually its the most important part of trading. but despite this fact, psychology is effective if you already have a high probability edge and proper money management rule. if you don't have those, psychology cant be that important for you.
lets look at a car, maybe engine is the most important part because without an engine you cant even drive a car. Imagine you have a car with powerful engine but without wheels and role. you still cant use the car despite you have the most important part.
trading is the same psychology is the most important but you need other part first.

wow, these are really interesting facts! of course, psychology is very important in trading, but there are some things that I even dedn't think about it. Especially using of red colour. I like this colour and I really use it often. Mb it's really better to reduce it..)

Thanks. I fined a lot of helpful information here. And psychology of trading this is one of the most inportant thing in trading. I think trader should avoid any factors that can trigger emotion inconveniences. And one piece of advice: it is very important to differ when you can problems in case of your strategy and when you have a loses because do not have emmotional stability. You are right in all about having a rest. And if trader has some loses, he should take a rest and come to other things. Do not try to cover the loses immediately. It is so risky.

The part about the red colour has never occurred to me before, thank you for the advice. I should've edited my charts a long time ago.

Psychology of a forex trader is important especially as it concerns how to manage emotions when in an open position. Can you accept a loss and close your position using a stop loss or you are ready to greedily hold on to a losing trade. This is vital to the success of the trader.

Trading the forex or other markets doesn’t have anything with pain, psychology or improvement: the only law is: if you know, you win, if not you lose! The proof: you abandon your thread.

You who have already lost everything and are looking for a way to get your money back, stay away from all the EA’s, indicators, softwares as Metatrader, Jigsaw, Sierra, Bookmap and all other. Understanding the options on the futures is the only thing that will help you efficiently. You ‘ll never find anything to help you on forex website.

Finally, think about that: universal access to financial markets is a huge opportunity to get rip off millions of naive people! YOU JUST GIVE LIQUIDITY TO THE MARKET MAKERS VIA YOUR BOKER !