Charts, strategies, orders, trades, entry and exit points, technical analysis, fundamental analysis – let’s be honest: trading might make your brain explode.
Indeed, trading is demanding, as you’re always having to focus on different things and multitasking. But, at the same time, trading is exciting and mind-blowing (in a good way this time!).
So, if you feel that you’ve lost all your mental energy and have to bring this excitement back, you need to work it out. Getting in the right trading mindset is not easy, but luckily there are several ways to fuel the flame.
The most important trading tool is YOUR mind. So recognising when you are right and wrong can help you pave your trading path. Trading psychology allows you to understand why you are making the same mistakes repeatedly. It also helps you to find patterns and solutions so that you can make better trading decisions.
Before we start counting the five things to get you in the right mindset, you need to acknowledge two facts: firstly, you’re a human being, so you can’t avoid making mistakes. Secondly, markets are not human beings, so there is no way to ‘understand’ their attitude. What you do need to understand and may want to change is your attitude towards them.
Come on… Give me five!
Is there a right trading mindset? Let’s be clear on this: the right mindset for you is the one that makes you feel better about yourself as a trader.
However, you can find some tips that help most traders avoid trading burnout.
Practice patience: Patience is a virtue. Winning traders are patient. In that way, they improve their performance. On the contrary, impatient traders deal with unnecessary losses, additional stress, and wasted emotional energy.
Never stop learning: One way to improve your trading is to review your trading strategies regularly and look for things you can do differently for better results. Even when you lose on a trade, you must try to learn from that losing position. Learning is an essential aspect of trading, and trading is dynamic. So, don’t stop the quest to learn even if you become a successful trader, because things in trading change all the time.
Control your emotions: When your trading is profitable, you feel like you are on top of the world. But when things are as you expected them to be, you’d better find a way to control your emotions. Emotional trading has several pitfalls, and doing so can result in further and more significant losses. A way to manage your emotions is to take a break, breathe and think logically. Then, accept the uncertainties of the markets.
Fear, which is the scariest demon in trading, can have a strong negative impact on you, so your top priority should be to control fear before you end up making mistakes until you quit.
Risk management: Practice with a risk-free demo account, set stop-loss and take-profit orders, consider the one-percent rule, and plan your strategy. In other words, do whatever it takes to cut down losses and prevent unpleasant surprises. Although the temptation of grabbing every opportunity is there, we must identify the risks of trading in advance to ensure we can endure if things go sour.
Get organised: Trading is a business, and any successful trader will tell you the same thing. Professional success lies in organisation, and here’s how you can achieve it:
- Keep a trading log to track your progress.
- Prepare a trading plan and review it from time to time.
- Stay in the loop with the latest trading trends.
- Set goals and define your trading style.
Has this blog got you in the right trading mindset? If the answer is yes, then open an account with Eurotrader to dive into the excitement of trading.