Namaste to all #Hive and #Inleo community members. 🙏
Anyone with experience will agree that the stock market is probably the toughest place to make easy money. You must have a good strategy that needs to evolve over time to remain profitable.
Every trade is a test where you have to keep your fear, greed, pride, and other emotions under control in such a way as to ensure that you earn more on winning trades and lose less on wrong ones.
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Like your strategies, your mindset also plays a big important role in your successful trading journey. Yes Journey! because being successful in trading is not a destination.
You know, very few who start trading, succeed. For every consistently profitable trader, there are hundreds who go bankrupt. What makes trading riskier is that it has a very low entry barrier. You will see that nowadays anyone starts trading. Without complete and correct information. Some of them focus on technicals and fundamentals, but most of them rely on others' tips and suggestions Just by looking at their screenshots of some big profits and from there your psychology begins to deteriorate.
You know that the most important aspect of trading is not actually when you buy or sell, but what you do before, during, and after a trade. What happens to the price of the asset you are trading is not in your control, but how you react while trading is! Very few people talk about this important aspect of trading – psychology.
This is one thing I have noticed many times in my trading journey too. Then I searched about it and found many articles related to it on Varsity.
Emotions often overpower our trading decisions. Trading lore is replete with examples of how fear and greed influence the masses to buy and sell at the wrong time. for example, traders hold on to losing positions, hoping they will turn around, or they sell off a position prematurely to lock in quick gains. The challenge of trading is to accurately understand risk, control your emotions, and execute a trade calmly and rationally.
Understanding the risk doesn't mean that you should be over-confident that I am ready to take this much loss because I am expecting 2x or 3x profit against this risk. Understanding risk means knowing the probability of the risk side and how much you will lose if a trade goes wrong, how rationally do the profits you see seem possible? And is this risk and the profit you are seeing against this risk consistent with your trading strategy and psychology?
Because, once you open a position, What happens to the price of the asset you are trading is not in your control, but how you react while trading is in your control! And you can maintain that control only with the right psychology.