Trading Psychology of a Trader
“Do you have your own Trading Strategy? If Yes, then test and evaluate your strategy first.”
Now Next, if you trade then what is the risk according to you for that particular trade? This is all the psychology of a trader that how much risk he or she is willing to take for the trade. Now comes discipline i.e. how discipline one is with his/her own strategy and how committed one is with his/her own strategy or style. One should not follow other’s trading style because everyone has his/her own trading style that fits his personal strengths which may vary from our strengths. Along with it, the time availability to follow the market and one’s eagerness to stay on screen during the market hours add value to one’s trading style.
A New learner should try to trade using paper trade or the best is to try a demo trading account where he or she can trade and develop own trading style which can be practiced time and again to be able to trade with same confidence when we will deploy our own capital in real trading. Before and after entering a trade, one should define the risk reward ratio for that particular trade because the lack of these traits can lead to cause of disappointment as a result of poorly executed trade.
The trading performance of an individual depends upon the trading actions not on the emotions but the individual emotional state is an automatic response where we start fighting the market i.e. when we overtrade to prove the market wrong in case of a failed or poorly executed trade.
At last, In the nut shell an individual should develop own style of trading and should focus on making it better by continuously improving the emotional state of mind. “ If one has an ability to book profits, he or she should develop a style of booking loss for a poorly executed trade as it may not be possible that one will always get a profitable trade.”