The secret to successful trading does NOT lie in an amazing theory or
indicator. The secret lies in the traders’ MIND. The seven (7) psychology keys of winning traders are:
1. Discipline
•Trade according to your trading entry/exit rules. Never on rumours, opinions and
emotions
•Have the discipline to stick to your strategy through the wins and losses
• Avoid listening to the opinions of ‘experts’ who can ‘predict’ the market based on
insight or news
2. Think Statistically
•A winning strategy will have wins as well as losses
• The losses can come in a row (5-10 losses together)
• Do not be greedy when you win or fearful when you lose
• Every trade outcome is statistically insignificant
• A good trade can end up as a ‘loss’. Focus on following the rules and not on the
outcome of each trade.
• As long as you have an edge (> 50% win) and average win is more than your
average loss, you will be profitable over many trades
3. Patience
• Only trade when there is a high probability opportunity
• When the rules tell you it is not the time to enter, do NOTHING
• Knowing what NOT to do is as important as knowing what to do
4. Focus on ‘What’ is happening and not ‘Why’ it is happening
•It is a waste of time trying to figure out why the market is moving a certain way
•Price movements are not caused by public news (e.g. Dow Jones increased because of the debt ceiling resolution)
• Avoid associating market trends with news events
• “What has happened in the market to cause this move?” is irrelevant to trading success.
5. Do Not Predict the Future
•It is impossible to predict the future-> driven by crowd psychology
•Avoid listening to experts who give predictions of the future or to predict yourself
•Trade based on the current trend or reversal in trend
•Predicting the future clouds our judgement and makes us less willing to take losses (ego).
6. Risk Management
•There is no trade that is guaranteed a win. Always risk a small percentage of
your capital (e.g. 1-3%) and enter high probability trades where your profit
target and stop loss is pre-set.
7. High Level of Confidence
• Confidence to follow your trading strategy through the wins and losses
• Confidence does not come from the outcome of any particular trade
• Confidence comes from knowing that your trading plan/strategy has a positive
expectancy (edge).
In conclusion,
Putting these seven (7) psychology keys to practise will help us to stay profitable in the long-term. Kindly like, comment and follow me for more useful contents on trading.
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