When a trader takes a trade, they experience wide range of emotions from panic in case trade is nearing stop loss to Greed when trade is nearing target thinking “Aur upar jayega abhi Hold karo”
This attitude of trade lead to looses. Yesterday ie. Budget Day many traders did not book profit when Nifty/stock were rising , thinking FM will deliver a growth oriented budget and were forced to move out of trade when margin calls were triggered. Self-discipline and emotional control are keys to success, which none of us are born with.
One of the top three things that will determine the success of a trader is the trader’s psychology, the weakest part of any trading plan is the trader and stress can knock a trader out of trading faster than anything else. You have to trade like it is a business. Realize that it is highly probable that half of your trades will be losers the money will be made by the half that are winners being bigger than the half that are losers.
Losing money is never a good feeling and sometimes causes psychological trauma, too which some traders can never overcome.
Some Traders get Sick…
Inflated expectations without appropriate skills equals disappointment which equals pain which equals psychological damage which equals fear. If a trader is feeling fearful, he can try to cover it up all he wants but his trading results will reflect his true feelings.
A majority of traders get very sick when looking at their losses. Believe it or not, some traders add to their losing position with denial that their trade is a losing trade.
“Cut your losses short”
A successful trader knows when to take a loss and move on to the next trade. Only trade what you’re willing to lose. This type of mental preparation prevents all the negative emotions so that you don’t have to be stressed out during a trade or ill when you are losing money.
The market doesn’t give you money…
You give it to yourself based on your ability to perceive an opportunity and execute a trade. If you’re not making money in the market, take the time to gain more knowledge and open your mind to new strategies. Invest in your education!
6 tips to becoming a successful day trader:
- Pre-plan a trade before entering a position
- Know and understand your risk
- Accumulate profits while controlling your emotions.
- Never trade in fear, but in control.
- You have to trade the market, the market does not trade you.
- The more you understand the psychology of trading, the more confidence you’ll have in your trades.
Your ability to accumulate profits is a function of your degree of self-valuation. The sense of self-valuation is, in fact, the most important psychological component of success and will override all others in determining your results.
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