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Psychology Is the Key

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Psychology Is the Key

Remember how you felt the last time you placed an order? Were you anxious to jump in or afraid of losing? Did you procrastinate before entering your order?When you closed out a trade, did you feel elated or humiliated? The feelings of thousands of traders merge into huge psychological tides that move the markets.

Getting Off the Roller Coaster

The majority of traders spend most of their time looking for good trades. Once they enter a trade, they don’t manage it but either squirm from pain or grin from pleasure. They ride an emotional roller coaster and miss the essential element of winning—the management of their emotions.Their inability to manage themselves leads to poor risk management and losses.
If your mind is not in gear with the markets, or if you ignore changes in mass psychology of crowds, you have no chance of making money trading. All winning professionals know the enormous importance of psychology. Most losing amateurs ignore it.
Friends and students who know that I am a psychiatrist often ask whether this helps me as a trader. Good psychiatry and good trading have one important principle in common. Both focus on reality, on seeing the world the way it is.To live a healthy life, you have to live with your eyes open.To be a good trader, you need to trade with your eyes open, recognize real trends and turns, and not waste time or energy on fantasies, regrets, and wishful thinking.

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