How To Improve Trader Psychology

Trading stocks is not as simple as it looks, once you have become competent in Fundamental analysis, Technical analysis and have a good grasp of money management you are ready to begin, what makes you now fail is not having the right mind set. Your trading Psychology must be seen to take any decision effortlessly without showing signs of emotions. You must be like a computer and train your mind to make logical decision and have contingency plans for all events.

INCOMPETENT TRADER

Before we look at the traits of a competent trader we need to know the traits of the incompetent trader, once we know all these negative traits we can take action to eliminate them one by one. An incompetent trader fails to make decisions quickley, they deliberate and have no plan in place and when they do it is not followed, emotions take over in good and bad situations and needless stress enters into the frame. The incompetent trader when successful becomes greedy and wreckless in their trades, and when their trades fail they become depressed and angry - they forget to look at their analysis and find a way forward. This type of trader has no place in the stockmarket and will eventually be flushed out.

COMPETENT TRADER

A competent trader is the opposite of a incompetent trader, their organisation skills ane second to none, they make decisions quickly based on previous analysis, they have a answer for all scenarios and always plan ahead to ensure they are not caught with their pants down. When a competent trader wins they are emotionless, its business they look at all the factors that contributed to their success and try and replicate andmagnify this - they work on their strenghts. When they lose they have the urge to see where they went wrong and to avoid a similar mistake in the future. This type of trader is the predator and people look upto them - their relaxed deminar and ability to take any event in their stride is testament to how well they have evolved their mind.

FAILURES

When a trade goes wrong you must not get depressed or angry, god is not against you and you are not a loser while the rest of the world is a winner, you got it wrong because you misanalysed. Just get over it, look at your intial analysis and find reasons why you failed, write these reasons down and from time to time look at these reason and avoid them. There are a certain number of mistakes you can make and knowing how to avoid them will make you a good trader.

SUCCESS

When a trade goes right dont place a deposit on a Farrari, you are not the worlds best trader - You are going in the right direction. Look at your intial analysis and see where you went right, now try and find trades similar to your winner as there is more chance of you winning using this method, if you practice on improving your strength whilst working on avoiding your mistakes there is no reason to fail.

By training your brain to think like this will make trading easy, it will be like baking a cake you follow a recipe and know exactly what to do, the end product will be a nice cake! Remember to read this article from time to time as you will be able to engrave this on your mind until it is second nature to you. Thats it, now that you have learnt Fundamental, Technical, Money Management & Trader Psychology you are ready to trade! but where do we start?

Please take the time to rate my article and leave a comment if you feel this has helped. Read my nest article that follows from this on Trading Methods, click the link below.

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