As you all know, trading is a fantastic business, you buy low and you sell high, and make your profit. It's very lovely when talking about it, but in actualizing it, it's a different story all together. It's a nature of business that is by itself uncertain. The only thing that you can be certain about in trading is uncertainty. And yet, a few people go on to make a living by day trading and actually making profits.
Some people trade long term, when they take positions for days or even months. But I'm basing this article on day traders. Those that just want to go into the market, make quick income and get out. Scalpers. Day trading is a line of investment, where you invest your time and your funds into minutes or hourly timeframe. And you sit there hoping to make some good money that day. And in most cases, you don't. And it's really painful.
First thing that must be understood is that you have to find a strategy that works for you, and the tendency of winning trades is high. That's the first thing, having an edge in the market. That way probability will favor you, because you'll tend to win more than you lose, hence make profit at the end of the day. You may not have thought about this, but your trading strategy is only a small part of the business, your psychology as a trader is very key.
Most times, when people lose lots of funds to the market, it's not because they don't have a strategy that works, it's because after perhaps three losses in a row, the trader loses his head and mind. And forgets about his strategy, and it's almost as though he wants to go to war with the market. Every sense of caution is thrown to the wind, he just wants to get back that money that he has lost. That's the losing psychology there.
And he makes bigger losses upon bigger losses until he blows up his account and probably hit his head on the table. Is his strategy good? Yes. Is his psychology good? A big no. First thing to getting a better psychology trading is knowing that you don't control the outcome. You can't force that market to do what you want. Next, you must understand that it's not a business of aggression, you're not a wrestler or a boxer, you are a trader. Your mind is your strength.
You need to master your emotions. The best traders are neither excited at a win or angry at a loss. They're like robots, just following their strategy systemically. Even if they make four losses in a row, they keep their head calm, knowing that it happens sometimes, and with a strategy that wins more, eventually staying calm and collected, they end up getting back their lost funds, not by force, but by sticking to your plan. Winning and losing is part of trading.
You must master your emotions, and reduce that urging desire that you must win right now. Patience is very important in the psychology of a trader. You must be patient. You must be like an animal that sets ambush waiting for your prey to get in. You can't force the prey in, you wait for as long as necessary for your prey to get in. Same with your setup and strategy you must wait till all elements are in place before you enter a trade.
Thanks for reading!
