When educating yourself about the stock market, the last thing you would ever associate with trading is human emotions or Trading Psychology. If you can learn how to deal with your emotions you are well on your way to successfully implementing one key discipline that is not always spoken about. Trading your own money magnifies the raw emotion that is put upon you when entering, exiting and whilst in a trade. Below are some of the most common emotions in trading:
Trading Your Emotions and Not Letting Your Emotions Trade You!
Anger - Do you ever catch yourself yelling out loud or cursing at the screen? Or complaining about the market like it is out to get you? This is a very common and dangerous emotion. It can easily destroy your belief in trading and the belief in having an edge when trading.
Greed - You see that your trade is well up and you start picturing that new sports car. You think to yourself "if I could just make 50 % more" but what can often happen in these situations is that your profit disappears and your trade is now under water, all thanks to greed.
Fear - Fear of losing money can make traders skip on a perfectly valid trade. It might also make traders take a small loss on a trade, to then see it turn around and give profit when all the time you were taking the correct steps of entering a stop loss which was never taken out.
Frustration - Why did I not take it? Why do I always take the losing trades and not the winners? These are very common questions a trader asks himself many times during a trading career. This frustration can destroy the motivation and lead to a previously mentioned emotion; anger.
Disparity - Giving up or feeling like it is 3 steps forward and 2 back. Not being able to see the light at the end of tunnel is one of the biggest reasons for traders giving up.
Pain - If you learn to deal with all your emotions such as fear and greed then you will hopefully never experience pain as this one is a tough pill to take. Seeing your hard earned money get swallowed up by the market is financial pain and an emotion we can all do without!
No trader will ever go through a complete trading career without experiencing at least one of the mentioned emotions. Many will even experience them on a daily basis so it is therefore very important to deal with these emotions when beginning your trading career. If you don't learn how to control your emotions then it can and probably will result in failure.
DescriptionA book that focus solely on trading psychology so don’t expect to find any strategies in here. This book explains how to approach trading in a structured and disciplined way and how to control your emotions. It helps you learn to accept losses as a natural part of trading. It is a MUST read. Do not expect to be a consistently profitable trader without “being in the zone”. Recommended for all levels of traders.
Discipline Needed to Trade The Stock Market
Without discipline you will lose all your money trading the stock market