Trading Psychology
  • Trade with discretionary money (DO NOT TRADE WITH MONEY YOU ARE NOT WILLING TO LOSE)
  • Prepare for some losing trades. No strategy is perfect.
  • Never go live until you are successful and comfortable with demo trading.
  • Continue to practice strategies with demo trading after you go live
  • Realize you don't need to be trading 100% of the time. There will be days when you shouldn't enter a trade.
  • Set an attainable goal and then quit for the day.
  • Trading is not a get-rich-quick scheme, take time to learn and practice. It's a marathon, not a race.
  • Have an exit strategy that you will use with real money
  • Don't let trades pass you by because you're overanalyzing a Chart
  • Be prepared for announcements and news at any time
  • Keep your trading plan simple

Emotions

  • Many skills are required for trading successfully in financial markets. They include the ability to evaluate a company's fundamentals and to determine the direction of a stock's trend. Neither of these technical skills are as important as the trader's mindset.
  • Containing emotion, thinking quickly, and exercising discipline are key components you need to understand to become a succesful trader.
There are two main emotions to understand & keep under control. Fear & Greed.

Understanding Fear

  • When traders see their position going in the opposite direction they want it to, they naturally get scared. They may overreact and feel compelled to liquidate their holdings or immediately take themselves out of trades, refraining from taking any more risks. If they do, they may avoid certain losses but will also miss out on potential gains.
  • Traders need to understand what fear is: a natural reaction to a perceived threat. In this case, it's a threat of losing their hard-earned cash.
  • Quantifying the fear might help. Traders should consider just what they are afraid of, and why they are afraid of it. But that thinking should occur before the bad news, not in the middle of it.
  • By thinking it through ahead of time, traders will know how they perceive events instinctively and react to them, and can move past the emotional response. Of course, this is not easy, but it's necessary to the health of an investor's portfolio, not to mention the investor.
Before entering a trade, you should already plan for all outcomes (both up & down). This way, you will have fewer emotions during live sessions, as you already planned for that specific outcome.

Overcoming Greed

  • There's an old saying on Wall Street that "pigs get slaughtered." This refers to the habit greedy investors have of hanging on to a winning position too long to get every last tick upward in price. Sooner or later, the trend reverses and the greedy get caught.
  • Greed is not easy to overcome. It's often based on the instinct to do better, to get just that little bit more. A trader should learn to recognize this instinct and develop a trading plan based on rational thinking, not whims or instincts.
Have a clear take profit point. Wheter that's the indicator giving you a take profit mark, a certain resistance, or a risk to reward ratio. Whatever it is, stick with it and don't change it.

Setting Rules and Following your trading Routine/Strategy:

A trader needs to create rules and follow them when the psychological crunch comes. Set out guidelines based on your risk-reward tolerance for when to enter a trade and when to exit it. Set a profit target and put a stop loss in place to take emotion out of the process.
REMEMBER! If you truly have tested a certain strategy for months and know it has a 75% winrate (for example), emotionally and mentally you need to remember that you will have a loss 25% of the time. This is completely fine since you know that 75% of the time it will be a winning trade and as long as you are using correct risk management, you will be profitable in the end. Thinking like this will keep your emotions in check.
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Emotions
Understanding Fear
Overcoming Greed
Setting Rules and Following your trading Routine/Strategy: