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Trading psychology

Trading Psychology

Within the broad, and sometimes confusing world of trading, everyone chooses to orient themselves towards one or another trading model; towards one or several currency pairs that seem more appropriate for your strategy; towards the broker that offers you better tools or that generate more security to trust your money; or to choose the best schedules, temporalities and an infinity of additional technical aspects, which must be taken into account for get good results in this activity.

However, one of the most important aspects to consider, if not more important, is to understand and accept the way financial markets work, to be clear the limits and expectations, based on the size of your capital, your preparation and experience on the subject, but, above all, take into account that once defined, tested and accepted its trading plan, it is necessary to stick to it without hesitation and without changes. The disregard This important aspect, results in the low percentage of success among people who They are engaged in trading.

“Taking into account the psychological part is crucial to make your activity profitable in the long term”

Let me explain: education and the accumulation of knowledge are not enough. These are the bases, of course, on which a successful strategy is based, with a view to achieving profitable results. However, in addition, it is essential to put it into practice and be impeccably disciplined with your plan. Overcoming the ego is the main path to achieving the expected results. Taking into account the psychological part is crucial to make your activity profitable in the long term. And this is the hardest part. Mastering the inner voices that suggest changes to the strategy on the fly, requires mastering the mind and overcoming pride, fears and unrealistic expectations.

The self-control at that moment, translates into reward. Trading is not complicated. The market rises, falls or remains stable. And there are countless tools to predict these movements in an acceptable percentage. The complex thing is to overcome the thoughts and feelings that arise at the moment of opening an operation, adhering to our initial plan.

If you manage to control your ego and prevent it from dominating your actions, maintaining your plan despite the fear, or the luck or avaricious that you feel at a given time of your work, this will allow you to be within the low percentage of winners of this activity. The opposite will take you to the bunch of dreamers who pretend to get rich overnight, and who end up trading, sooner rather than later, beaten in their pride or their finances.

However, this point is ignored and belittled by many. They forget that there is no strategy that ensures 100% success. This does not exist; it’s not possible; nobody has it. The search for that perfection leads to wasting time, patience and capital. It is necessary to accept that there are operations that give losses. What the strategy has to look for is that the profits are greater than the losses, in the amount necessary to meet their financial expectations, quickly closing their losses, and optimizing and stretching the profits. Although the ideal is that the ratio of trades with profit is from 5 to 1, when you manage to have 2 trades with gain against one of loss, you can feel the good way.

Related: Ego vs your investment decisions

Operations and even negative periods, although the strategy is good and well applied, are acceptable. You have to control losses even if they can not disappear. In addition, you can not lose sight of it, which is the amount of profits or losses in each operation, which determines that at the end of the year there are profits or not. This must be contemplated by the strategy.

At Tradeview you can trade Forex CFDs, Indices and stocks with the lowest spreads and commissions in the market, in addition to the best execution. Come join us today to see how we can help you better understand the market and master market psychology.

Maria Fernanda Isaza

Maria Isaza
Business Development
misaza@tvmarkets.com

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Tradeview Ltd. is not a portfolio manager or an investment advisor. This Market Report is for informational purposes only. Any statements made or opinions voiced in this Market Report do not constitute investment advice. The Tradeview Ltd. Market Report does not constitute a solicitation to buy or sell in the financial markets. Although the information contained in the Market Report comes from trusted sources, Tradeview Ltd. is not responsible for guaranteeing the accuracy, timeliness, completeness, or fitness of such sources. Tradeview Ltd. shall not be responsible for and disclaims all liability for any losses which may be suffered from access and use of the contents of the Tradeview Ltd. Market Report. Trading any financial instrument on margin, using leverage or otherwise involves considerable risk. Therefore, before deciding to participate in any style of trading, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose. Consulting with your investment counselor, attorney, accountant or other professional upon whom you rely for guidance as to the appropriateness of an investment in any style of trading is recommended.

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