Improve Trading Psychology: Mindset & Risk Control

Trading Psychology: Mastering Risk, Mindset, and Time for Profitable Trading

Trading Psychology

In the simplest terms possible, trading can be summed down to risk management. If you follow a strict plan, you should never find yourself stressing as you should have already accepted the capital at risk. Risk-to-reward ratio is very important in trading as it gives you the ability to be correct 50% of the time or even less and still be a profitable trader.

It is important to remember also that life is all about perspective, and so is trading itself. What you see in the markets can be completely different than what another trader sees. In order to succeed in this game, it is important to focus on yourself and worry less about what others are doing. The more you focus on your own trading and strategies, the better your mindset will become, and the better you will perform.

One of the main reasons people become traders is due to the large amount of freedom it brings. Regardless of the amount of money you are making, if you are generating an income while living life on your own terms, you are on your way towards achieving real freedom. It is important to remember that freedom is defined by time, not money. What good is making a large amount of money in a job you have no passion for, while paying for it by exchanging precious time of your life?

Time off the charts is equally as important as time on. Many have the idea that time spent staring at a screen is developing their skills; however, it is a bad habit to develop as it can lead to irrational decisions based on emotions. This is due to constantly seeing candles move in the opposite directions. Breaks from trading are needed every once in a while. Just like people take time off work to take a break or to go on holidays, the same concept applies to trading. Trading should be treated just as much as a job or a career as any other. Your mind is your most important asset, make sure you take care of it!