The field of trading is loaded with unlimited challenges. It includes a fast-paced environment with infinite pitfalls and amazing opportunities. There are lots of odds against every trade that traders take in the financial market. Studies reveal that almost 80% of traders end up losing money in the marketplace; and only 1% are able to achieve long term profitability.
When a high percentage of financial traders are facing failure, it may create a negative impact on your trading emotions and mindset. In such situations, it becomes important to find a solid solution to handle your mindset and emotions.
Although there are unlimited skills that are required to become a successful trader, the fundamental role is played by the trader’s mindset. The psychological aspect plays a very important role in trading as they have a direct relation to the quick decisions in the marketplace. One needs to maintain an active presence of mind to close the trade at profitable margins.
The concept of psychology of trading:
Market psychology can be better defined as prevailing sentiment levels of the active participants in the marketplace. The mindset of the investor leaves a considerable impact on the overall performance of the trades. It is important to understand what brings fear into your mind and what makes you more disciplined. This analysis can help you develop potential psychology about the market.
Fear and greed are two major emotions that influence the individual’s performance in the marketplace by a considerable level. The automatic emotional responses can short circuit the decision-making process. Hence, it is important to address the fear and greed in a more effective manner. Once you won your emotions and set up a stable trading mindset, it becomes easier to develop a sound trading methodology.
Below are the two main factors associated with the financial trading mindset:
It works as a security device and plays an important role in deciding your survival in the market. Traders can have a fear of failure that is closely associated with their personal self-growth. It results in loss of capital and trade losses as well. The increased pressure to achieve perfectionism may also cause some stress and fear in mind. Few other trades have a fear of success in their mind. This may sound little strange, but this kind of fear is generally difficult to handle. The fear can further cause anxiety and stress; ultimately, the person fails to take forex trading decisions.
In the trading world, greed can be determined by several practices. Some of the most common factors are overtrading, aggressive risk trading and inability to define the loss of profit. In all these cases, a trader may suffer mismanaged trades. The situation may ether cause overconfidence of aggressive risk-taking. Such decisions often lead to harmful results in the trading world. Hence, it is better to practice a healthy mindset to achieve your goals.
If you need some psychology help for trading, then it can be a good investments to seek professional help. Hypnotherapy is a powerful therapy to help a trader reach great success in a short space of time.