Improving Trading Psychology – Improving Your Chances of Becoming a Profitable Trader

Trading is the most insecure business that you can be in” – says psychologist and journalist Norman Welz. You need to achieve the right mindset to become a profitable trader. Almost all traders in MetaTrader 4 (MT4) need the security of all forms and that has become a huge problem. Trading is something that reflects our personality and induces so many intense emotions.

The right mindset is needed to trade effectively.  Despite that, it is very hard to stay away from emotions that we know could affect the trading strategies that we have. There is a lot of influence around us and when we start trading, all these influences tend to create a ruckus and dysfunctional us entirely. Changing these patterns is both frightening and difficult.

Improving the Trading Psychology

Being aware of your emotions, personality traits and biases is the best way to improve trading psychology. Acknowledging these things could lead you to create a powerful trading plan that could mitigate the risks in trading.

For instance, finding yourself as an overconfident person, you may realize that pride and overconfidence in trading hampers your ability to make wise decisions. You may be the type of person that lets the losses run because you are hoping that the market will make a good turnaround instead of cutting the small losses in your trade before it creates a huge distraction to your trading account. In this case, you have the possibility of gaining greater losses and eventually, your trading account will collapse.

Since losses are part of trading, what you can do to counter them is to utilize stops to minimize the losses. You can also make a good decision on when and how you should open and close a trading position. By putting stops, you are able to overcome your emotions and your biases. You made conscious decisions and didn’t act on impulse.

Effects of Biases in Trading

Biases are described as pre-determined personal dispositions favoring one person over the other. These biases are harmful because they can hinder good decision-making and cloud your judgment which leads to impulse decisions or decisions made out of gut feeling rather than based on technical and fundamental analysis.

How To Avoid Emotional Trading

Knowing the personality traits

Identify your personality traits and you will be a step closer to success. Be honest with yourself, whether you have a tendency to be impulsive or act out when you are frustrated or angry.

Developing a trading plan and sticking to it

If you are eager to achieve your goals, a trading plan will be very helpful as it serves as your blueprint for trading. It highlights your commitment and the available funds. It also tackles your trading strategy as well as your risk-reward ratio. Developing a trading plan will help you get comfortable when trading.

Patience is a must

Patience goes along with discipline. These two are crucial parts of trading in MetaTrader 4 (MT4). Trust your trading plan and be patient and disciplined in attaining your goals. Do not rush things because trading is not an easy-money scheme.

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