Investment psychology is a topic I have been researching for a long time because I'm interested. That's why I want to share my knowledge with you, because it can help you with trading. There are various opinions related to the success in investing. Some experts say that success depends 70% on the psyche and only 30% on strategy. Others believe that mastery over emotions is 95% of the success of the stock market, and only 5% is a strategy and its appropriate application.

Error of the beginning traders

Many novice traders are too confident and do not practice their psyche, but are looking for a "golden strategy" that will make them earn millions of dollars.You already know that there are many strategies in trading and each can earn money, but not every person earns money. The same trading strategy for one person can be profitable, and the other a loss, why is it so? Because strategy is only a tool, and the most important is the psyche.

Each trader should practice his psyche before playing with large amounts of money on the stock market. It is also important to relax and cut off the charts in order to fully regenerate and develop the habits of a professional trader.

Two Scenarios In Trading

If you are working on your strategy, find the one you like. Then build two scenarios. First: what you will do if the market behaves according to your expectations. Specify the conditions that must be met so that you can close the position and profitably. Second: what will you do if the market behaves against your assumptions? Specify the maximum loss that you are able to incur.

Many novice traders think that the loss on the stock market is a failure. Professional traders know that losses are not an element of the stock market game and are able to determine how many percent of the loss they are able to incur during each transaction. If you specify your strategy, think about what you will do when you close the position at a loss? Maybe you will go for a pizza or maybe run? It is important that you turn your head away from the stock exchange and do something pleasant, preferably a sport. Thanks to this you will regenerate faster and start playing with a fresh mind.

Observe your moods and behavior, and if you notice that you have a bad mood or euphoria, quit the game because it is easy to make mistakes in such a state. I hope to some extent I have helped you, and soon another entry in the series: investment psychology.