The Psychology of Trading
Show Me the Money
Many beginning traders think that they should concentrate on making money. Usually this doesn’t work. There is a money management module later in the course which will go into detail of how you should behave and treat your funds. For now, start thinking in terms of preserving your capital, as this is the most difficult task ahead of you. If you trade appropriately and concentrate on not losing too much, then you will find that you make profits. It’s when you go hell for leather to make money that you usually find yourself losing.
It sounds silly, I know, but it usually works out best that way. Consider – if you lose your money then all your trading knowledge is worthless. You must preserve your capital as well as you can so that you can keep on trading, earning and learning.
The Psychology of It All
Again, we’ll talk about it later, but we have to get straight right now that you will be challenged, more than you currently realize, when you start trading in earnest. Trading is very difficult psychologically, and you must be prepared to be disciplined in your actions.
Fear and greed are usually named as the dominant emotions that will attack your trading discipline, and you will find your feelings working against you, particularly when your money is on the line. Most people think that they can be in control of themselves if they really want to, but you will be experiencing forces that may be outside your previous experience. At least, that is the finding of many novice traders.
What you need to do and how to do it will be reinforced by the modules, the videos and webinars. Don’t try and second-guess your next move when trading, and make sure that you always stick with sound principles regardless of whether you are winning or losing. If you are winning a lot, it is easy to think that you have “got it” and that everything you touch will be golden, which will tempt you to trade more than you should and take on additional risks. If you have a losing streak, you may be determined to double up on your trades to ‘catch up’, which again can lead to ruin. Steady and consistent application of established principles is the recipe for long-term survival and growth. You can earn a great income on your own terms with trading, and this course will lead you the right way to make it a long term career.
General Note
To make it sound less awkward, throughout the course I have referred to ‘he’ and ‘him’ rather than always trying to include both genders, and probably missing one or two instances. This is not intended in any way to offend or exclude female traders taking the course. Please understand that it just sounds easier, and is intended to be all-inclusive.
Also, I use ‘I’ and “we” throughout the text. When I say ‘I’, I’m expressing a personal opinion or experience. I use ‘we’ when referring to things that we will do together, such as ‘we will study indicators in module 7′. I hope this is not confusing to you, but it seems the most natural way to present the course.
Join the discussion