During the trading process, investors face many psychological changes. They have many fears to overcome in order to make transactions and earn profits. Learn about trader psychology and useful tips to help you make better decisions in the future.
Trader's Confession: Fear of Loss in Trading
Any trader wants the transactions they make to bring profits. However, in reality, there are still transactions that bring big losses, even large losses with large amounts of money if the trader does not manage risks well.
Fear of loss is considered a bad psychology and traders should quit as soon as possible. But very few traders can successfully overcome this fear and according to the book The Disciplined Trader, fear of loss often leads to loss. We cannot avoid it but we can understand it, control and limit losses.
Here are some effective methods to help traders stay away from losses.
Don't set your stop loss too close
When the market fluctuates too quickly and strongly, traders tend to not dare to lose points and place stop loss orders too close. If the market reverses, you will lose the opportunity to close profits and have a good trade.
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Moving stop loss to break even too soon
New traders have one thing in common: they move their stop loss to breakeven early, as soon as they start making a profit. This makes strong market movements in your favor irrelevant.
Close the order and take the loss when the price has not moved to the stop loss point
Many traders, when seeing the price drop, are afraid of losing and close their orders even though the price has not yet dropped to the set stop loss. Many traders have even suffered a loss when doing this.
When the market reverses and increases again, traders will feel regretful. At this time, you do not dare to place an order because the price is higher, afraid that the price will decrease like before.
Trader psychology of fear of missing out on FOMO opportunity
FOMO is a term that is all too familiar to many traders. It is known as a syndrome in which one is afraid of missing out on interesting and attractive things, especially when others experience it.
This trading psychology is somewhat dangerous but is overlooked by many traders. FOMO will make investors rush into trading at all costs. Excitement and excitement are a big disaster for your account.
Even because of this mentality, many traders enter the market without research and analysis, relying entirely on emotions. In fact, the number of transactions is not the most important thing for traders, but the type of profit earned. Don't be too happy if you see that your number of transactions is too large.
Trader's confession about fear of being wrong
Every trader wants to make a profit from trading and looks for ways to increase the winning rate. However, investing is a game of probability and no player can win absolutely. Therefore, traders should not be afraid of making mistakes and not dare to make any orders.
We can control the risk, minimize the loss but cannot guarantee that the transaction is not wrong. Just control well to avoid the account falling into the red alert.
Traders need to build confidence in themselves, overcome the fear of making mistakes, and execute transactions without hesitation or indecision. Being decisive when executing entry/exit orders in the market helps you limit risks and minimize your own "mistakes".
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Traders need to learn to accept
We participate in trading every day, there are days when the market is good, increases in price and brings high profits. But there are days when the market is bad, you encounter things that are not as expected or even lose money. You need to learn to accept and prepare well for the next transactions.
Don't let the previous trading problem, yesterday's trading become an obstacle for today's trading. Every day is a new beginning, there are always opportunities opened, the bad things of the previous trading will not affect the new trading.
You should avoid comparing yourself to others when someone is doing better than you, making a profit while you are losing. Instead, take them as inspiration to improve yourself. Don’t compare yourself to anyone, this will only put you under more pressure and make you more likely to make mistakes.
In trading, traders have to face many psychological problems. Overcoming these is mandatory to bring confidence, help investors make the right decisions, bring good profits for themselves. Hopefully the information has brought you useful things when sharing the confidences of traders.
