Trading Psychology

Your trading psychology is a very important factor that decides and dictates your success and failure. A balance of discipline combined with the capability of taking risks determines your stay in the market. Knowledge, experience and skills all turn out to be a fruitless if you do not have a proper mental and emotional setup.

The art of overcoming a conflict between fear and greed is an asset to a trader. Greed makes you stay in a position longer than advisable, just for the sake of extra profits. It also includes taking unnecessary large speculative positions.  Generally when greed in a bull market is sky high, markets turn around and take deep dive .In a similar manner fear leads to premature closing of positions or restricts one from taking any position, which leads to people missing profitable positions. Thus it becomes very important to maintain a harmonious balance between greed and fear.

 Some important points will help you to become a disciplined trader:-

•       Decide your limit; about how much you can invest or trade. Then act accordingly. Never ever over trade.
•         Manage risks for each and every position. Don’t hold a stock simply because it is in loss. If you don’t have enough reasons that justify the stock in your portfolio – exit it. 
•     Never ever give up discipline. Once you abandon trading discipline you invite losses. Such loss hurricanes can throw you out of the markets.

\           Once you are disciplined psychologically, congrats! Half the battle is won................

 Stay tuned for next article: Reason why 90% people fail in the markets.