TRADING PSYCHOLOGY

The first thing you should know about trading psychology is that the stock market algorithms capitalize on two basic human emotions, fear and greed. They know how to suck you into a trade because price action is showing you what looks like a good trade. They also know how to scare you into thinking your going to lose big if you don't get out! That's a foundation of short term of price action. Other psychological factors include, but ARE NOT limited to; 

Fear Of Missing Out is a big problem for beginning traders. They look at chart patterns that have already matured and "jump in". The reasoning behind it is the algorithms know how to make you fear missing out on a nice move. The truth is, those moves may or may not have happened if you were in them. 

One of the most profitable assets a trader has is self discipline. It starts with effective money management and protecting your bank but goes well beyond that. Your stops should be small enough to where losing the money will not ruin your day but profits should be enough to make your risk worth while, over the long term.

Detachment from the money and trusting your technical analysis is paramount in trading. You must learn to become mechanical in adhering to your trading plan, shut out the noise and realize that trading algorithms are designed to stop out 90% of traders. So know your risk/reward, set your stop losses and targets and stick to them. 

The best traders can adapt to a changing market. It imperative that you remain flexible in your trading and accept when you are wrong about a trade. You must develop a "If this, then this" system for each trade. 

Analysis Paralysis is simply the inability to take action, regardless of what price action is showing you. All of the information in the world is useless if you cannot act on it. If you have done your analysis and know what should happen, take the trade! Don't be left on the sidelines kicking yourself later about missing out on a great trade. 

Much like any other profession, being a profitable trader requires effort and retention. As a wise man once said, "insanity is doing the same thing over and over, while expecting a different result." You must become proficient in Technical Analysis and build your understanding of what's going on in the market, you'll become more confident about your trades, allowing you to move forward in mastering the markets.  

Never stop learning new things about trading. If you are like many professional traders, you love your job. Something about making money by clicking buttons just "turns you on." Go with that. That's how you become better at the trade. Keep learning!