Psychology is a much used concept in the field of motivation. Often, when something isn’t going well, psychology is found to play a big role. This is especially true in investment trades. The true secret to profitable trading is psychology. You need a certain kind of mindset to slay the market big time.
In some money making sectors, the most crucial aspect is to maintain a positive attitude. This will give you the perseverance and determination to push onward with your plans. Maintaining uplifted spirits in making trades can help you a bit but this is not the most important psychological frame of mind to maintain. To truly make significant gains, you also need to mentally latch on logic, discipline and confidence.
Keeping the right trade psychology is easier said than done. It doesn’t take a lot to say you are confident and disciplined. You may even feel that you are playing the role. Once you start losing trading profits however, you will discover that keeping your composure and belief in your abilities isn’t as straightforward as it is supposed to be after all.
What actually happens when losses start showing? Different traders will have slightly different reactions. Most however will feel the urge to start making decisions based on emotions. Some for example may begin to hold on stubbornly to a position even when they are on a losing streak because they are hoping that the trend will turn around eventually. The problem is if circumstances don’t improve, they will have lost more than they can endure losing or more than they can ever regain.
Emotional trading can also be apparent in those who profit from trading in small increments. They may let go of a position as soon as they see small gains because they are afraid of sticking around, thinking that the trend might eventually move down. Although they are saving themselves from possible losses, they are also effectively cutting themselves off from the potential of earning a lot in case a trend does continue to rise.
So what can you do to protect yourself from the kind of psychology that lest emotions make the trade decisions? All that you really have to do is to make sure logic has a tighter grip on your frame of mind. It has to be the kind of logic however that is firmly grounded on facts. You can only ensure that you are thinking correctly and logically if you have a back tested trade system or plan in place.
There are many systems that have ensured profitable trading for their users. You can perhaps study these existing plans and use some of them to your advantage. In most cases though, it is a far better option to create your own set of rules or at least tweak an existing system to fit your specific profile and personality as a trader.
If you’re interested in finding out how to call your own shots, you might want to give trading courses a shot. Since you are the only one who can control your psychological state, it pays to learn what concrete steps you should follow to approach trades in a disciplined, confident and logical way. Take this step and you will finally enjoy great trading profits.
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