Psychology of trading: how to overcome yourself and achieve success (Part 1)

This article tells specifically about what psychological problems of traders directly affect the losses they make, and how these problems can be effectively overcome.

The material is based on the real experience of professional traders. They were able to identify their psychological shortcomings and then change themselves in order not to lose money due to emotions and wrong mental attitudes.

What is psychology in trading?

Trading is analyzing the market and making decisions based on the analysis made: buy, sell or stay away.

And since analysis and decision-making come from the brain, emotions, and experiences, which also happen inside the head, can directly affect the trading process. We're talking about euphoria, impatience, anger, fear, and pride. Their influence can be so strong that:

• The trader suffers a loss in trade despite a correctly made analysis;
• The trader does not enter a position (or does not leave a position) when an appropriate signal is received;
• The trader trades with too large or too small a volume;
• The trader gives too much importance to some factors and ignores others.

Emotions do not always lead to losses. Sometimes they help to gain more profit, but then it is usually associated with unreasonable risks, which is not a sign of professionalism.

Traders who have been in the trading rooms of large hedge funds and investment banks (for example, Goldman Sachs) know that psychologists are constantly working there to monitor the emotional state of traders. If any of the traders shows signs of emotional imbalance they can be removed from the trading terminal.
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