Do you know the feeling when you seem to have already discovered the “Da Vinci Code”, but still there are moments that prevent you from trading comfortably? Even trading professionals and sharks have difficult moments, and if you are saying like “I never worry” or “I do not regret the deal,” then most likely you are cunning or in this way trying to strengthen your own beliefs. Yes, there are traders who engage in a kind of self-hypnosis and various techniques in order to tighten their trading.
So, in order to find answers to the basic questions regarding the psychology of trading, we first need to identify their causes that generate these questions. In our opinion, there are three main reasons that can bring a trader out of balance.
“Departing train”
This is the same feeling when, due to the human factor and various reasons, you simply did not manage to enter the market. With the "leaving train" there is a strong desire to enter the market, to catch up with this very train. At such moments, we are frustrated, desperate, and to some extent angry, and 9 out of 10 traders will enter the market. The result is obvious.
Output: to make fewer errors, first of all, it is necessary to formulate a clear algorithm of your actions, that is, you must strictly follow your rules.
“From small to great "
Everyone has ups and downs in any business, including in trading. But for some traders, ups alternate with falls quite often, while for others it is not possible to find ups at all. So what's the deal? Does the Grail really exist? Maybe we just have to look at it all through a different prism? Determine for yourself what falling and taking off mean for you: for someone, falling is a series of losing trades, and for other, it is a complete loss of the deposit. For some, a takeoff is a series of profitable deals, and for someone, a deposit state of 10,000 USD. You have to determine your own “line” of rise and fall.
“I know where the market will go, so why do I need Stop Loss?”
If you want to trade (to trade, not to play), then ignoring the protective level of Stop Loss is probably the biggest mistake in the financial markets.
Do you ever get behind the wheel of a car, knowing in advance that there are no brakes? I think no! So it is in trading - without Stop Loss it is very stupid to trade, and in this case, the risk is not justified.
In general, you just need to understand yourself, determine what you want to achieve in the market, then draw up a clear algorithm and action plan, and you will see how your trade tightens!
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