Money Risk Trade Management & Trading Emotions
Traders' emotions have a significant part in their success or failure. Emotions have an impact on our results and will determine whether we are successful or failed traders.
Are you a trader who falls into the Average category?
• You don't have a trading strategy or a point of view.
• You don't have any money management guidelines.
• You don't have any risk management policies in place, and you don't use a risk management system. Stopping Loss
• You're prone to emotional ups and downs (price goes up - happy, the price goes down - you are sad)
• When you're in a deal, you're usually nervous.
• You rapidly "give back" your recent gains to the market.
• You aim to recoup losses as soon as possible (revenge trading)
• You spend the entire day riveted to your computer screen, tracking every price movement like a hawk.
• You never go through your trade results to see who won and who lost.
• Here's a simple one: You're wasting your money!
I'd like to discuss what an average trader is. Unfortunately, the majority of people fall into the category of "average trader." Essentially, people appear to believe that trading is simple and that if they buy a stock for any reason, the market would automatically go in their favor. God forbid they succeed since that will only perpetuate that behavior in the future, setting the stage for a catastrophic disaster. If you're an ordinary trader, you don't have a trading strategy or perspective. That's all there is to it. The majority of people treat this as a pastime and have no trading strategy in place. They have no money risk management regulations at all. Don't panic if you're sitting here reading this and have no money risk management policies in place. You fall into the category of the average trader.
Do you have a tendency to experience mood swings? So, if the price goes up, you're overjoyed; if the price goes down, you're attempting to leap out a window. Average traders are prone to emotional swings like these. When you're working in a trade, do you get nervous most of the time? Are you able to get a good night's sleep? Average traders have little faith in their strategy or plan, therefore they're frequently jittery every time they enter a deal. Your recent profits are swiftly returned to the market.
If this sounds familiar, please let me know: A profitable trade nets you $500. You're in terrific shape. Then you get cocky on the next trade and lose $700, giving back all of your gains to the market and more. This is a common occurrence. This does not imply that you are a failure. It just signifies you're a mediocre trader.
You take a modest loss on a trade, let's say $1,000. You immediately go out looking for a trade to recoup that loss. You end up chasing a bad entry or pushing the pace and getting into a wrong share. Most people don't do this and continue to lose.
Here's a simple one for you. Are you experiencing a loss in the stock market? If you are, you fall into the average trader group, as do the majority of others.
To be a good trader, you must have a trading strategy that is not dependent on emotion and the discipline to stick to it. This discipline entails acting like a robot and obeying a set of rules without emotion, as well as taking the appropriate action when necessary. The following are the four essential components of a trading strategy:
• Knowing what to trade and when to deal is a result of education and experience.
• How many to trade - Money Management (also known as Position Sizing) is the process of determining how many to trade.
• When to exit if you've made a mistake - Risk Management, also known as Initial Stop Loss
• Knowing when to quit when you've got it right - Risk Management, also known as Profit/Trailing Stop
Do the words "cut your losses FAST and let your PROFITS run" ring a bell?
So now you have a trading strategy or set of rules that will tell you what to purchase when to buy it, and how many to buy.
What about your ability to perform? How do you assess your portfolio's performance?
Now check here for how to learn how to Be a Successful Trader: bitdotly/3up3Kk2
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