Want to master your trading psychology?

Want to master your trading psychology? 

Read this:

Mastering your emotions and ego is an essential part of a profitable trader because the trader is the weakest part of any system.

There are three things needed for profitable trading:

1. A system with an edge

2. Risk management

3. Correct trading psychology

Why is psychology so important in trading?

Without self-control and discipline, no trading system will work long-term.

Emotions and ego will cause you to:

- Trade too big

- Overtrade

- Abandon the strategy during a losing streak

Trading systems are easier to create and backtest than they are to execute with true money, during market hours as losses and wins create issues with fear and greed.

The proper thinking for traders is similar to that of a business owner thinking in terms of executing systems, and being unaffected by outcomes of single trades.

Each trade should be a transaction inside the parameters of a system; not an attempt to prove you are right about an opinion or prediction about an uncertain future.

A trader should know the expectancy of their system and what losing streaks and drawdowns to expect with realistic expectations.

The fastest way to manage emotions is to trade a position size that doesn’t affect their ability to execute their plan without being emotional.

A trade should be both meaningful and manageable.

If losses are managed then each trade should only be one of the next 100.

The only goal of trading should be profitable trading.

A trader needs faith in their trading system and faith in themselves to execute it with discipline.

They should not have faith in any individual trade outcome because they can be totally random in nature.

A trading edge comes from minimizing losses and maximizing gains. 

Not being right every time.

You should be open to the fact that anything can happen, at any time.

Go with the flow of price action and try not to prove anything about your own ability to predict the markets or be correct on every trade.