Any experienced day trader knows that psychology plays a bigger part in their trading than any other single factor. Any type of trading has its ups and downs and as a trader, you have to know how to deal with them or you will end up in a bad position. If you trade for a while then you are bound to take a hit every now and then so prepare yourself for it. I’m not saying this to discourage anyone, I’m just trying to save a lot of people some unwarranted surprises. I used to let the thought of losing money effect the way I traded the markets. After a while, I was able to cope with bad trades better and control my emotions, which in turn made me more profitable because I was able to bounce back a lot quicker.
We’re raised to think that “losing” is bad, but in trading losing is a part of business. It’s very possible to lose around 50% of your trades and still make money. However, you must have a very good money management plan in place to see consistent profits with a lower win ratio. Even if it goes against the core of who you are, it’s important that you become comfortable with not being right every single time. It may take some practice, but most people can train themselves to develop good discipline.
If you are bad at money management then losing money will leave you flustered and probably make you want to pull out all of your money and give up everything. Being a good money manager is one of the keys to trading because it can be a huge stress even if you are making a lot of profit. Trading involves both profitable and unprofitable trades, and knowing how to manage your emotions that arise from the unprofitable ones tends to matter more. No one likes making an unprofitable trade, but sometimes there are no ways around it.
Whether you are making money or losing it, you have to remember to control your emotions. Not being in the right state of mind can make a person do things that they would not normally do. If you are dealing with your hard earned money then you need to have a good, clear mind. Good luck, and remember that trading will have its ups and downs so be prepared.
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