Trading Psychology

By theatdhe | Questions and Thinkings | 29 Dec 2020

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Discipline and the ability to control your emotions is a virtue that many of people lack. These abilities are something very important in order to be successful in trading and as a doctor as well I can tell that this is super important in medicine as well. 

As stoics say: ''To be calm is the highest achievement of the self.'', but it is very hard most of the times and especially for new traders to be calm during times that they are losing their money. 

What I want to talk about in this article is how to manage your emotions while trading, and in the following posts about trading psychology I'll be talking more about techniques of trading and similar content. 

Fear of losing 

Fear is a feeling, emotion that is natural and primitive and it is a biomechanical response. But let me break it to you, as simple as I can. WE FEAR THINGS THAT WE DON'T KNOW. Now, in our case, we fear that we are going to lose for two main reasons, first is because we've put a big amount into a trade and second is that we are not really sure why we bought or sell something. When a trade goes into blue (profit) we are good, we feel victorious (but inside us is still the feeling that it might go into loses again and sometimes that's why we close a trade to early), when it goes into red (loses) we feel awful, hopeless and confused (biggest problem here stands that we close that trade, later we see that it went in our trading direction, but we have closed in loses, this makes it even more difficult). 


How do you control this Fear?

I do suggest some of techniques that I think can be very useful. 

  •  You got to know that in the market and in life generally loses are inevitable. 
  •  You have to know the capabilities of your trading account. Don't trade big lots, ones that would drain you account or blow it. Calculate how much you can afford to lose and still be left with amounts to trade again. 
  •  Analyse the trade and then trade it. Don't see what you want to see, see what price is showing you. 
  •  Don't just jump into a trade, wait until you are sure! It's better to have a no trade day than a losing day. 
  •  When you lose, understand that is a part of growing process, you'll never go just up! In the road to success there are Ups and Downs along the way. Take it calmly and give yourself some time to relax, come back tomorrow and see what you did mistakenly, if you trade immediately you'll trade in fear or revenge. 
When is the best time to enter a trade?

Just a reminder, we are focusing in the psychologic aspect and not the technical one. 

The best time to enter a trade is when you are emotionally calm, when you have checked your trading strategy and the trade that you are about to make is in harmony with your strategy! You are ready to jump into a trade when you have deeply analysed everything on that pairs chart, and you have taking into consideration all the things I've mentioned above in the controlling fear section. 



A good trader is someone that can maintain his/her emotions while trading. This trader doesn't jump into any trade he/she sees, they have a reason to do so primarily, they have analysed everything prior the trade not after they entered. They don't check up every minute how their trade is going because they are confident on their analyse, the don't move away their stop losses when a trade is close to touch it because they have analysed it before and they know that if a trade is about to touch SL than it means it is shifting directions. So a experienced trader is not someone that has been in the markets for a long time, but someone that can maintain the emotions and always stay disciplined with their trading strategy. Shifting from a strategy to another one because you took a loss it's not the way, that even is called ''the loop of doom'', what you should do when you take a loss is check for the mistakes that you made when you entered it. 


What do you do to maintain your emotions? Let me know in the comment section!


Catch with me on Leofinance!



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Crypto lover, dentist, Forex and Crypto Technical Analyst!

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