Business & Investment

5 Trading Psychology Lessons Every Trader Needs to Learn

In trading, you are your own worst enemy. Fear of missing and chasing. Fear of taking losses because you are scared. Not profitable because of greed. Revenge trading because I want to recover what I lost. At any stage of the trading journey, trading psychology is the biggest obstacle for traders to overcome.

In today’s article, we’ll introduce you to some of our favorite strategies for overcoming some of the most common psychological problems faced by all stock traders and investors.

Fight against FOMO (Fear of Missing Out)

FOMO is the most common reason why we buy stocks at high or low to low prices. One of the worst sentiments in trading is seeing stocks make big moves without you. For some traders, it’s even worse than incurring losses! The stock market is so big and so many stocks are moving every day that you will always miss a chance. To be a consistently profitable trader, you need to learn to fight FOMO. This video lesson will help you learn how to overcome FOMO.

Correctly size the position to avoid fear

Position sizing plays a major role in trade control. One of the most common mistakes traders make is that the position is too large. It poses a greater risk to them of incurring huge transaction losses and also makes their trade control much worse.

When you are trading huge sizes, you make a profit in the wrong place, stop either too early or too late, and generally become much more emotional in your trading. Reducing the size reduces emotions and improves trade control, so you can actually make more money. This video lesson will show you the importance of properly sizing your position and how to break the bad habit of resizing.

number Emotional attachment

One of my favorite quotes: Ticker, Not a company. One of the biggest problems traders have is their emotional attachment to the stocks they trade. Their attachment causes them to mismanagement their position.

These traders are usually unable to make a profit when they make a profit, or to stop their position when the loss is small and manageable. Here’s how to fight emotional attachment in a deal:

How to scale out position to reduce greed

Exit timing is one of the most difficult parts of trading stocks. Selling too early is missing a big move. If you see a great profit that isn’t realized because it’s sold too late, you’re back to a break point or loss. The best exit strategy for managing these two issues is to scale out your position. That means taking partial profits (½, 1/3, ¼). In this video lesson, we’ll show you how to scale out your position correctly and how to manage your greed while trading.

Revenge Trading: How to Stop Compulsory Trading

The reaction of all traders after taking a trading loss: “How can I get this back?” Most traders jump to the first stock they move, take another loss, and then go into the red. I will. What they know next is that the small, manageable red days turn into days of weeks or months of green cancellation. The best traders make sure that trading losses do not affect their trading choices and are not emotional. Here are some of the best strategies for fighting revenge deals:

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5 Trading Psychology Lessons Every Trader Needs to Learn 5 Trading Psychology Lessons Every Trader Needs to Learn

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