0How often have we come across traders who have encountered losses after having entered into trades which were extremely profitable or traders who shy away from initiating or delay in placing trades even though the market indicators are suggesting so? How often have traders been very successful while trading demo accounts and performed quite the contrary while trading real- time accounts? How many times have we heard stories of traders who have wiped their trading accounts clean because they failed to cut losses?
All these questions lead to a larger debate; the characteristics and the role of trading psychology leading to a successful trader.
Trading psychology refers to a trader’s behavior or perception when actively trading the financial markets; A trader can either follow a set trading plan, irrespective of market conditions and external factors, which could ultimately lead to a high ratio of profitable trades and cutting losses short OR indecisive actions leading to trades not being initiated and profitable trades resulting in losses.
The attributes to successful trading is the ability in displaying the right psychology, keeping emotions in check as far as possible and following a pre- determined trading plan and not worry about the outcome in the near- term.
Traders ought to be open to new ideas and innovative thinking, even if they have developed successful trading systems, they should connect with other traders and exchange views which could be mutually beneficial.
Trading behavior is not limited to beginners, as even experienced traders often deviate from their set trading beliefs, resulting in their downfall at some point in time. The primary reason traders find it difficult to change their behavior could be the result of extreme or over confidence in their abilities or the lack of it, impatient in exiting a trade, while others could be governed by emotions such as greed and fear. The very few who make it are the ones who keep their emotions in check, follow the trading curve, day in and day out and are not affected by the factors mentioned earlier.
Trading in the financial markets is never easy and traders, both fresh and experienced will vouch for it. Trading is a skill and only those traders who are well prepared with a plan and go that extra mile in implementing them will be successful.
