What determines the trader’s psychology?
When the trader trades on the demo-account, he gets a false impression. He thinks that it’s quite easy to get profit at the financial markets. But, everything changes when the trader passes from the demo-accounts to manipulation of real money. As a rule, the results aren’t as impressive as they were at the time of the trade on demo-accounts. Sometimes it happens that the first losses lead the novice trader to a complete refusal of the trade. Why does this happen? Let’s try to find out.
The main psychological obstacles of the trader
The enemy number one is realizing of the fact that you can lose money. This fear can put a psychological block on the process of making a decision. This leads to full indecision even if the trader understands the current market situation. This affects the estimation of the loss or profit chances. How to overcome the fear? The best way is self-hypnosis. Try to explain yourself that you have already made the first step and there is no way back. What is more, you should realize that the increased level of anxiety won’t bring the profit closer. It will only make the distance longer. The anxiety can lead to two possible consequences. The first one is the fear to lose money. As the result, there will be the closing of a profitable trade before the significant earning. Or, on the contrary, you’ll try to plug the holes in the trading strategy through the opening of new orders. In this way you’ll use them in order to compensate the previous losses without the proper analysis and consideration.
The enemy number two is uncontrolled passion and greed. If you are unable to control these emotions, you should leave trading. Both the passion and greed make the trader wait for more profit. You’d better thank for the received income. However, psychologists speak with one voice that on the condition of a skillful control the anxiety and greed can lead to a good result. A certain degree of anxiety helps to estimate the possible outcome. It increases the level of the common sense in the trading. The greed encourages the search for more opportunities in the trade. It teaches not to give up. How to find the balance among the emotions in order to trade effectively?
Intuition is not a panacea! It is self-control!
The experienced traders have no doubt that the intuitive understanding of the market can play the vital role at the financial market. Though, only guru in trading can let themselves rely on the intuition. They have absorbed the market analysis at the cellular level. In most cases it is necessary to rely on calculation and market rationale. You should make a plan or a strategy. Then, accurately follow them and don’t kid yourself. Always remember about risk management. Do not despair in the case of failure. And, of course, let’s not get carried away if you see a lot of profit. Keep calm in the trade despite the external factors.
How to conquer the stress in trading
Each trader has his own character. Every transaction differs from each other. The market is constantly changing and moving. Numerous unforeseen circumstances can change the market situation greatly. It is quite common that the trader feels stress in such situations. There is only one piece of advice. Learn to distract yourself because emotions should not interfere with trade. Gaming is full of emotions but the trade must be sensible.
Step 1: Follow the plan
Did you manage to conquer the stress once? Memorize the recipe and let it become your ritual. Convince yourself that you have a plan which helped you to conquer the emotions. The trade, which you are planning, shouldn’t cause stress. It must become automated without extra problems. You ought to ignore sudden price actions. Try to look deeper at the tendencies and regularities. Remember, trading requires extra efforts in the development of the strategy and, also, when you make spontaneous motions.
Step 2: The investment schedule
The trader has an opportunity to trade 24 hours a day, 7 days a week. But note that the trade shouldn’t harm your health. The trade without breaks can bring you a feeling of disappointment and lack of something. Maybe, you won’t know what and when to do. On the other hand, some traders can exhaust themselves in the chase for new trading opportunities. In this way, you won’t be able to avoid bad results. So, we advise you to create your own investment schedule to follow it.
Choose the currency pairs or other assets which you are going to trade. Watch for news in regard to your assets or those ones that can influence the market in general. Decide when and why you are going to enter the transaction. You have to control your activities and trading.
Step 3: Establish your goals
It is easy to lose sight of your initial goals due to a great variety of instruments, analytical materials and economic news lines. The understanding of the goals is the first step in their achievement. Each transaction, purchase or a sale must be put into the perspective according to the purpose of your trading. It must be done either the term is long or short. Poorly defined goals or their misunderstanding will surely lead you to the disappointment of the financial market. Remember, your purpose must be tangible and easily measurable. Specify targets and be afraid of nothing if you are able to keep in sight several goals at the same time.
Let’s make a conclusion:
- Everyone is able to cope with the anxiety regardless of the market situation. The lack of the emotional control leads to the financial losses!
- The trade mustn’t be tense and painful. You have to take the ups and downs as the natural points towards the success.
- Both the rational approach and the systematic one are necessary qualities for the prosperous trader. You’d better go to the casino if you can’t conquer the passion! Nothing is impossible as self-control comes with the experience.
If you really want to succeed in trading, follow the saying: “Constant dropping wears away a stone”.