Setting Trading Psychology to Become an Expert Trader

Setting Trading Psychology to Become an Expert Trader
Setting Trading Psychology to Become an Expert Trader

How to manage trading psychology needs to be mastered by traders so they don't experience fear, stress, and regret in making decisions. Because trading is a form of foreign currency trading investment.

A trader also needs to be good at analyzing technically and fundamentally. Trading psychology itself is a form of trader's decisions in making transactions influenced by mentality, thoughts, and behavior.

Trading psychology is one of the handles for a trader so that he is mentally and emotionally ready to face the policy-making process. If the prediction is wrong, of course, the decisions taken will cause him to experience a lot of losses.

How to Manage Trading Psychology

Basically, an easy way to set up trading psychology is useful for providing optimal trading results. Apart from that, control yourself so that you are disciplined to become a competent trader, as well as train in clear and stable management skills.

If you are a stock trader, then you need to do a few tricks to manage trading psychology so you don't get stressed easily. The following are steps that can be followed to control emotions during trading transactions.

1. Make sure you are in a calm state

The first thing to pay attention to when starting trading is to make sure the surrounding conditions are calm. Trading activities require calm so that traders do not involve emotions when making decisions.

Apart from ensuring a calm environment around you, make sure that you are also in a calm state. How to set up this trading psychology if you get used to it will have an impact on the wisdom of making reasonable trading decisions.

2. Make Realistic Targets

Having the dream of getting the maximum profit is not a mistake when trading. But you still need to realize that not everything will happen as expected, the same is true in trading.

Avoid very high self-confidence because you have just made profits repeatedly. Usually, this situation traps traders into thinking about continuous profits without considering a well-planned strategy.

One way to manage trading psychology is to teach traders to make realistic and precise decisions or targets from the start. Don't expect too much and be unrealistic because it will actually be dangerous.

3. Create Trading Plans

The next step is to make a trading plan, which is a strategy when trading. You need to be consistent with the strategy that has been made. This can be started by using the correct analysis.

After that implement the plan with confidence. In trading, this plan is also considered an opportunity. If you don't run it at all, of course, the opportunity to get a profit will just disappear.

It should also be understood that every plan that you plan does not always go according to plan. So make another trading plan in case plan A doesn't go according to plan.

4. Set Risk Management

The next way to manage trading psychology is to manage risk management. Like the previous points, trading does not always generate profits at every position opening. There will be some plans that miss the strategy.

In some conditions, traders are sometimes required to open several positions by following the chart. Therefore, it is necessary to have the ability to analyze risk as well as how to manage the risk of loss.

If you are used to risk management, then your instincts will be trained to decide the next policy. That way, even if you experience defeat, your capital will not run out right away.

5. Apply 3M (Mind, Method, Money)

The next step in how to set trading psychology is to apply the 3M or Mind, Method, and Money. These three things have become a common conversation in the world of trading because traders must be able to master them.

  • Mind
    Closely related to one's psychological factors when trading, especially at the stage of making a trading plan and then managing risk management. The mind requires you to be able to control psychology to carry out the strategy according to plan.
    In applying this Mind trick, a trader will be tested on whether he dares to press his open position when he gets a profit or not. Do you dare to apply a stop loss when you are in a position that is not according to plan?
  • Method
    The next way to set trading psychology is to apply the Method trick. The method is closely related to the trading system or method that will be used by someone. There are various tested methods to choose from in analyzing the market.
    Each method taken must be carried out in a stable psychological state of the trader. The goal is that the person is not wrong or deviated when making decisions and this can have fatal consequences for his trading.
  • Money
    This money management trick is done by relying on the ability to control good emotions. As the name implies, the Money trick is related to managing capital and then adjusting it to the trading plan that has been prepared.
    Make sure when applying this way of managing trading psychology, you don't deploy all of your own capital the first time you trade. The unique fact is that many traders still ignore this Money trick for several reasons.
    The first is a psychological factor that is not easy to measure. To overcome this, it is necessary to have the ability to analyze technically and fundamentally to be able to calculate the results of the analysis using computer software.
    The second reason is that most traders do not really understand psychological factors. Indeed, there are not many references to discussing trading psychology so most traders feel that they have understood themselves.

6. Don't get carried away by emotions until you overtrade

The next way to manage trading psychology is to make sure you don't get carried away by emotions that result in over-trading or over-trading. Did you know that trading in weak psychological conditions is very detrimental?

For example, someone experiences continuous profit so that it has an impact on his emotions. Suddenly the next step is found the trader invested a huge amount in the hope of getting his profit back.

It's easy to get carried away by emotions, it will actually harm yourself where the risk of loss or loss is quite large. Actually doing everything using emotions will not provide any benefits.

7. Take Time Out

The last way to set trading psychology is to take frequent pauses. Before trading, you should first take the time to manage your emotions when trading.

Actually, the most important aspect in this regard is trading psychology. When you have to experience quite a lot of losses, then you need to make it a lesson to hone your skills in trading.

When emotions have started to appear and control the body, it's good to take a moment of silence. You can do it through yoga, sports, soccer, and so on.

This trading psychology will be tested through several emotions. First, the fear of starting trading because of mental weakness. Second, greed wants to get a lot of profit in a short time.

Third, excessive expectations because someone does not carry out the strategy according to his realistic plan. Fourth, the emotion of regret comes at the end when you experience a rather large loss.

How to regulate psychology above must be done with full discipline until someone is at the stage of being an experienced expert trader. Even though the stock is declining, don't panic because you have mastered how to manage trading psychology.
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