A large part of successful trading comes from mastering your mind! Let's talk about the three most common psychological mistakes in trading!
#1 F.O.M.O. Trading
The Fear Of Missing Out tells the trader that every opportunity in the market is the ONE and they cannot miss out!. The FOMO trading can cause you to:
- Take every single trade you see as it was the last one
- Oversize your positions
You need to understand that there will ALWAYS other trading opportunities and it is okay to miss out some tradings, you are supposed to be selective.
IF you missed it… you missed it. Get over it, move on and find the next one
#2 Revenge Trading
this kind of trading can make you lose you entire trading account. It happened when the investors loose a trade and they feel like they have to make back that loss.
IF your losings are upsetting you enough to make you seek a revenge of the market, probably you positions are to big! you should start trading smaller size! just remember, reducing your positions you will be start trading using logic instead of emotions.
you'll win some, you'll lose some... As long as the outcome is INCOME!
#3 Overconfidence
Overconfidence is nothing more than actual greed. This is an irrational behaviour that could lead you to lose more money than any other psychological trading mistake.
“Overconfidence reflects the tendency to overestimate or exaggerate one’s ability to successfully perform a given task” — Investopedia.com
To overcome it, you should keep in mind that even the most successful and professional traders have a hard time to achieve good returns. Some days will be good others will be bad, there are no super traders.
Conclusion: You should learn how to manage your emotions and start trading using your logic.
See you next time! 👍
