The Psychology of Trading

The basic principle of trading psychology is that trading should be based on rational decisions and not on emotional reactions. Emotions are not wanted in trading. Emotional control from large part determines trading success. Why?

Because you could do everething good and other factors(I will takl about them later in this blog) can show that it's time to close your position and that greed pig inside your head tells you to wait for price to go up next few dollars and even the best trade can turn to losing trade. And all this because you made this decision based on your emotions.

I don't doubt about importance of emotions. I believe we have them for some reason . And I like good emotions like joy, love, etc. But when you trade you should clear your mind. I know about some traders that don't even trade when they are upset or they are not in mental harmony.

Two most common emotions in trading are greed and fear. They can turn profitable trade to losing trade. They can turn sleep into nightmare. They can be reason for ending up with trading. It's important to develop your trading style that best suites your personality. I hope that I emphasized enought how important is mental and emotional control.