The underlying psychology of trading
When your trading
system flashes up a potential trade, you may get excited at first, but then doubt settles in. What if the trade doesn’t work out and you lose money?
Chances are you’ll be stuck between wanting to take the risk and potentially profit, and leaving the trade, avoiding any risk in the process.
Trading boils down to having the nerve to place trades. If you don’t take the risk, you can certainly miss out on good opportunities.
If you’ve just come out of a losing trade or two, chances are higher that you won’t have the nerve to put on another trade.
You’ll start to dissect the trade and the potential outcomes.
How to deal with trading nerves
Having a positive attitude about trading and the potential outcomes is one way to deal with this. But there are other things you can do to help yourself…
Trading tip #1: Have a trading system you’re confident using
Build up confidence with your trading system. If this means using a demo account and not risking any money for a few months while you put it through its paces, so be it.
Doing this will help you build up confidence with your system. And if it isn’t working well, you can make changes.
If you have confidence in your trading system, this will help you put your nerves to one side and put a trade on.
Trading tip #2: Minimise your risk per trade
Keep your risk per trade to a minimum. For example, risk 1% to 2% of your trading capital on one trade.
This will help reduce the pressure you feel on your trade performing. And it will help you have the confidence to put a trade on.
But trading comes with risks. You can avoid that. It may be that you’re simply not suited to trading. It’s not for everyone.
So there you have it. How to know if you’ve got what it takes to be a winning trader.
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