What is Trading Psychology?

[Tempera]

The emotions and state of mind that contribute to trading success or failure are referred to as trading psychology. Trading psychology is a term that describes several characteristics of a person's personality and behaviour that impact their trading decisions. Trading psychology may be just as important as awareness, experience, and competence in determining trading performance.

 

[Glenoid]

I think trading psychology is about managing your emotions while participating in trades. A trader should always be rational and never make decisions based on emotions. Greed and fear are the most dominant emotions that a trader goes through. Whenever these emotions dictate their brain they tend to make the wrong decisions only. The most important quality or trait for a trader is having patience. They must be able to stay calm and composed in all situations. Getting over excited after a win or getting severely depressed after a loss can have a negative impact on their trading decisions. Being greedy and over-trading is really common among beginners. And it is a big reason behind most of the traders suffering from huge losses in forex.

 

[Tomfoolery]

Trading psychology is all about how you feel about forex trading and how well you can manage your emotions. You are bound to feel emotional while trading but controlling them is needed when you wish to become a successful forex trader.

 

[weskusklong]

Trading psychology is an important aspect of trading stocks, Forex, or virtually any other security. In fact, it is no less significant for conducting a successful trade than, say, trading skills and knowledge or current market conditions.

Trading psychology is associated with the traders’ mindset and how they are managing their emotions, thought processes, and trading decisions. According to the trading psychology definition, traders have better chances of getting large payouts, or at least not losing too many funds, when they stay rational at all times and not yield to greed or fears.

Even though psychological stimuli are subjective and different for individual traders, there are still some universal influences that determine how people conduct their trades. These stimuli include:

• Fear
• Anger
• Impatience
• Greed

When a trader is afraid, they may feel compelled to liquidate all their trading funds and not open new positions, which can make them miss the real opportunity. When they are angry after a loss, they tend to make rash decisions and open new trades when the market is clearly against their position.

As for impatience and greed, traders overcome by these passions usually want to get payouts immediately or/and at large amounts. They don’t want to wait and make tiny steps towards success; they want to achieve it at once, which can often lead to their demise.

In order to overcome fear and anger, and manage impatience and greed, traders need to practice their psychological responses to various situations, just as they practice their actual trading skills. This way, they will not be overwhelmed when the market behaves in/against their favor.

Well said, thanks for sharing. This is something that I definitely have to work on as I have realized over the years that you can have the best trading strategy in the world but if your mindset is not right you will never make it in forex trading.

 

[Sherverty]

Educating a trader , training a trader without the mindset and mental skills , is like preparing educating a headless chicken trader. Almost 99 % of traders will lose , due to mindsets and psychology.

 

[Charles Agustin]

We can’t feel but trading psychology plays a vital role in trading. Traders should focus on developing good human qualities to be a good Forex trader. Emotion is one of the worst human qualities that drive a person towards failure. Traders must avoid over-trading being yield to greed.

 

[Pediment]

Trading psychology is all about managing your emotions while trading. You must be able to think past your feelings and emotions in order to make rational and logical decisions as a trader. Whenever we let our emotions dictate our trading decisions, that turns out to be a terrible decision most of the time. Emotions like greed and fear can easily get in our way and that increases the probability of losses in trading. Greed results in overtrading which is a major reason for many traders losing money in forex. On the other hand fear creates a brain fog and reduces our capacity to think with clarity. It is important to pay attention to your thinking process and make sure to not make decisions based on emotions.

 

[Charles Agustin]

Human qualities have a great impact on trading and traders can’t manage it sometimes. And these qualities handle one’s psychology. Greed and emotion are the worst human qualities that inspire a trader take high risk in trading and go bust. To develop trading qualities, there is no alternative to learning.

 

[Kenaleene]

Trading psychology is associated with the traders’ mindset and how they are managing their emotions, thought processes, and trading decisions. According to the trading psychology definition, traders have better chances of getting large payouts, or at least not losing too many funds, when they stay rational at all times and not yield to greed or fears.

In order to overcome fear and anger, and manage impatience and greed, traders need to practice their psychological responses to various situations, just as they practice their actual trading skills. This way, they will not be overwhelmed when the market behaves in/against their favor.

 

[Reticular]

Trading psychology is related to how a trader deals with emotions. Many newbies suffer from losing or missing out which leads to rash decisions and unplanned moves that increases risk double than resting levels. Trading psychology can draw an entire outline on the future of the trader's journey. A good plan sets future moves in a disciplined manner avoiding unnecessary risk. Traders must learn how to develop a calm mind to make practical choices as they grow their account. There will be no issues as long as traders are well educated on the market environment.

 

[yusonthetrack]

I highly recommend you to do exercise on a regular basis, it will have huge impact on the chemicals in yout brain.

 

[sarahgoutvaks]

Fear, anger, impatience, greed are the most harmful emotions for a forex trader. These emotions paralyse their rational mind and they just make impulsive decisions that lead to losses. So a trader should never let their emotions dictate their mind during a trade.

 

[Quirky]

Trading psychology is about learning to manage your emotions in a way that does not affect your trading decisions. It is easier said than done, because it is difficult to control your emotions when there is money involved. You are bound to feel fear when you risk money or feel excited when you earn profits. Losing a trade makes you depressed and the desire for profits can even turn into greed as you trade. All these emotions are going to pop up in your mind once in a while. Being a trader is about not acting based on these emotions and feelings. You need to fight the urge to make emotional decisions if you want to become a good trader. A forex trader should be rational and logical at all times. The ability to control your emotions will give you great power and will take you to success for sure.

 

[Genetrix]

Trading psychology is the mindset of a trader, about how he responds and processes the different circumstances in his day to day trading life. While the emotions of every individual is unique and subjective as per their own character traits and biases, there are a few common trading emotions we find reflected. These are- fear, anger, feeling of greed and vengeance, self-doubt, anxiety and depression.
The goal of improving a trader's psychology is to be more rational in trading, and handle trades more professionally without getting astray due to overwhelming emotions.

 

[ShihTzu]

Trading psychology is so important in forex, it helps in analysing the market and honestly helped me in few of my trades as well. It is definitely a fascinating concept as well.

 

[Gumshoe]

Trading psychology is all about what you think about trading and what your thoughts make you do in the market. If you are too sad or fearful, you may not want to trade. If you are too happy or excited, you would want to make some good money through trading. If you are angry or frustrated, you may want to recover all your lost money from it. This makes it really important for traders to think wisely about the trades they wish to execute.

 

[Subfocal]

Trading psychology is all about how you feel about trading. Whether you get angry after making a loss, feel frustrated when a trade doesn’t work, or feel happy on making a profit, all of it comes under trading psychology. You need to work on your trading psychology so that your emotions don’t overpower your decision-making.

 

[Chatterbox]

Trading psychology is an important part of your trading career. It doesn’t only teach you to react to certain market situations, but also helps you in dealing with emotional breakdowns. As your money is involved in trading, you are going to go through different emotions. Trading psychology helps you in utilising your emotions in the best manner.

 

[Allegator]

Trading psychology remains one of the most important topics when it comes to trading and forex. It can make one rich or make one poor, all of which depends upon the psychology of trading or trading psychology.

 

[cashisking86]

Trading psychology is probably what makes trading one of the toughest businesses in the world. We are often our own worst enemy when it comes to money and this trait is magnified when trading.