Trading Psychology: The Winners Vs The Losers
If you have developed a great trading strategy but have yet to develop the ideal trading psychology, this could be holding you back from achieving your goals.
These are the main rules to follow that set apart the winners from the losers…
P = Positive Mindset
Keep focussed and abide by your trading strategy. Stay positive when experiencing a winning trade and don’t dwell on the negatives when experiencing a losing trade.
S = Signals
You must have an entry signal, which indicates the best time to enter a trade. Exit signals are also important too, these indicate the best time to exit a trade.
Y = Your long term goals
Long term positive goals should be your focal point, not the misfortunes on experience your way to achieving success.
C = Confidence
Have the confidence to trade with real money, as once you have mastered the demo accounts it’s time for the real thing! Start off small until you find your feet.
H = Homework
At the end of your trading day it’s time to do your homework. Write in your trading journal how your trades performed and what (if anything) could you have done better. Use this reflection to learn from mistakes and make changes in the future.
O = Opinion
Follow your own opinion, and not the opinion of others, when deciding what stocks to trade! It’s easy to get swept up in the excitement of a tip or a ‘craze’ but you must step back and evaluate whether that certain stock is right for you.
L = Loss
Unfortunately, losses can always occur but don’t let this scare you from taking risks. A small element of risk is always present in a good trade. Always try to minimise your losses by placing ‘stop losses’ and only risking 1% of your capital.
O = Opt out of a trade:
Be honest with yourself if a trade isn’t working out. If it doesn’t feel right, it’s time to opt out of that trade. A good trader knows when to trade, a great trader knowns when to NOT trade.
G = Greed
Don’t make decisions based on your own greed or fear. When you’re on the live markets it’s not uncommon for emotions to take over; This is when you need to follow your trading plan!
Y = You must be motivated!
If you are not motivated and prepared to put in the effort and study, you will not reap the rewards. Trading is hard work and profits don’t always come straight away.