Only plans can bring success you have to follow a proper way to succeed in trading.
28 September 2021 02:48 AM
What is Trading Psychology?
In a nutshell, trading psychology is the study of emotions and feelings related to the process of trading. It's an area that many novice traders aren't prepared for – especially those who have been exposed to some aspect of technical analysis or what we call "charts and signals." Technical analysis looks at a stock chart and tries to identify support and resistance, pivot points, moving averages, etc. Technical analysis helps a trader identify when a particular stock or market is at a turning point with some degree of accuracy. This gives the novice an added feeling of confidence that they may not be ready for.
Trading Psychology is about self-awareness, self-control, and discipline in the trading process, and that ability is only developed with experience.
Self-awareness is the key to trading success, and most traders begin their education in technical analysis enthusiastically because they believe it will help them predict future price movements.
Common Mental Trading Mistakes That Must Consider
Not Making a Plan and Sticking to It
Only plans can bring success; you have to follow a proper way to succeed in trading. Therefore, it would be best if you had several strategies that you could use. For instance, imagine that you are a day trader, so you should decide which pairs you will trade in a day. But if one does not work out and another takes off, you might be able to change your mind and trade the other.
Not Believing in your Methodology
Many peoples in the forex market are not convinced about their strategies and making money. It is good to focus on trading if you are sure that you are right. Even if you think that there are no doubts, it is still good to test your strategy.
For instance, if you are following trends, you should take your time to backtest. You have to find out the result by backtesting. Is it showing good results above 80%, it shows 80% good results you can follow it? Also, you should find out the answer is it a solid concept like momentum or reversion? If all of the answers go in your favor, then you should follow them.
Not Appreciating the Difference between Planning Something and Living It
It can be easy to plan for something, but it is hard to live that plan in real life. One more example, imagine that you take one hundred trades in a year, and you have lost 20% of your trades and wins 80% of trades. So, you have to find out the strategy by backtesting at a particular time.