Trader psychology

Trader psychology

Trading requires that you keep a cool head. The best traders succeed because they are able to control their emotions and because they think before they act. Greed, impatience and the lack of emotional control will inevitably lead a trader to lose.

Discipline: Set up a trading strategy before you trade, and set some goals in order to not make hasty decisions. Follow the signals that your plan, and use them even when you're losing. If your system has proven itself effective in demo mode, then you should trust it.  

Humbleness: When you're confronted with the markets, you have to accept the trends you see and the fact that you won't always be right. Look back on your mistakes with an analytical eye.

Keeping cool: You must always keep a cool head keep trading separate from the rest of your life. You have to evacuate any pressure you may feel and stay objective regarding the markets. Don't let trading take over your private life, don't be a victim of your ego. Sooner or later you'll have to close off a losing position; don't try to get your revenge on the market by immediately opening up another position.

Forex trader psychologyBehavioural finance theory

Behavioural finance seeks to combine behavioural and cognitive psychological theories with conventional economics and finance to understand what drives investors to make irrational decisions.

Following a trading planWhy don't traders follow their trading plan?

Following a trading plan without bending any rules is easier said than done. Here are a few reasons why most traders have trouble sticking to their trading plan.

emotion management system What is an emotion management system for traders?

Your emotion management system is the subsystem of the trading plan that controls how you follow your trading strategy and risk management system.

Investor psychologyWhy 2 traders can see different things when looking at the same chart

Two traders can perceive the same chart differently and obtain different outcomes. The main reason: a lack of discipline. Some take too many risks, which greatly influences their perception of what a market does and may do next.

MBTI testTrader personality types | Who succeeds the most in trading?

Trader personality types according to the Myers-Briggs test (MBTI).

mindfulnessThe true key to trader psychology: mindfulness

Mindfulness is a mental skill that is of specific value to traders who wish to improve their trading psychology.

Successful forex traders Successful traders vs. those that lose

Having a good strategy is not enough to make money in the forex market. When two traders use exactly the same trading strategy, they will usually end up with different or opposite results. This difference is due to the psychology of traders, as each trader tends to think differently.

Forex trader's attitudeThe forex trader's attitude

The forex trader's attitude is an important element that must not be neglected. In order for a trader to elaborate a trading style that matches his mindset, he or she must identify his or her key personality traits.

Forex loser How to cope with losing trades

In forex trading, creativity and the desire to take risks increase exponentially during winning streaks. However, this is generally not the case when your hard work and the time you've invested lead to losses instead of profits. Stress and the taking of unnecessary risks are frequent side effects after a series of losing forex trades.

Trading strategy Even the best trading strategy won't save you

Trading strategies, systems and methods always look great on paper, but when it comes to investing in the real world, market chaos and unpredictability often render even the best trading strategies unsuitable for the task.

trader mistakes Why do traders make stupid mistakes?

Why do smart traders make stupid mistakes, such as holding on to losing positions and reduciing profits by cutting trades too early? The emotional impact of the risk of losing money often wipes out trading plans, which disappear in a fog of fear and doubt.

Forex psychology: objectivity How to remain objective when trading

One of the biggest challenges you'll face in your quest to becoming a profitable forex trader is maintaining objectivity while trading. While there are many factors which contribute to your loss of objectivity in a given situation, there is a clear and defined path you can follow to regain it.

Forex psychology: difference between demo and real trading The psychological differences between demo and real trading

Most beginners who switch from a demo account to a real account generally think that their results in demo mode can easily be replicated with a real account. Due to this, some traders give up when they realise that this is not always the case. Here are some reasons...

The psychology of inexperienced tradersThe psychology and behaviour of inexperienced traders

This diagram represents all of the psychological reactions that a trader or investor can feel when observing the evolution of prices. As embarrassing as it is to admit, we've all been there!