"Psychology" is the key factor of winning or losing in the real world. There are two types of Psychology in human beings.
- Very Strong Psychology by Birth
- Strong Psychology built by Experience
If you are Psychologically strong by Birth, Then It's "Okay".
But If you are not strong Psychologically. Then still you can make it strong by experiencing some stressful conditions in a controlled environment (In the case of Trading, It is a practice in Demo Account).
You can Build Stong Trading Psychology using this.
What is Trading Psychology?
The psychological Skillset which is required for Trading is called "Trading Psychology".
It is quite possible, you are trading for 3-4 years but you are not a profitable trader. It could be possible that your Trading Strategy is good and other traders are making a profit with this same strategy.
Then It's a matter of Trading Psychology.
How does Trading Psychology affect Profitability?
Trading Psychology is the skill that can prepare your mind, in such a way that you can trade in any psychological condition.
You generally do Two Things
- You book Full Loss in losing Trade with SL Hit (Stoploss Hit).
- You book Minimum Profit in positive Trade and Kill the Trade in between. Your mind has a fear of Market Reversal.
Thus, You lose money in both of the directions, "Maximum Loss in Negative Trade" and "Minimum Profit in Positive Trade".
So, Try to Strong Trading Psychology for changing this situation to "Minimum Loss in Negative Trade" and "Maximum Profit in Positive Trade".
How Trading Psychology helps in Trading?
If you keep practice with the rules of Trading Psychology then,
- Your mind does not affect by the Last Lossing Trade and you will not start revenge trading.
- You always exit from Wrong Trade even before Stop Loss Level.
- You book Maximum Profit with Trailing Stop Loss. (Take Profit Level setup at some more PIPs)
- You did not wash your entire Trading Account.
- You always do proper research on each Losing Trade, "why this trade hits stop-loss".
- You will stop trading if this day is not for you.
- You will start Buying when other Traders Buy and Selling when other Traders Sell.