How should one prepare mentally for trading(financial markets)?

December 14, 2014 at 3:00 pm

Answer by Dave Hughe:

It's impossible to succeed in trading without the correct psychology and mindset.

Discipline is the one most important factor in any trader's success.

You can have the best strategy in the world and lose money if you don't follow that strategy to a tee.

The majority of traders lose money because they get overpowered by emotions. Greed and fear are the two enemies which every trader has to deal with daily.

It takes confidence and courage to keep trading the same system after a string of consecutive losses or to take profits off the table when the price is moving in your favor.

There are different methods to control emotions. Among others are meditation, breathing exercises, sports, yoga, etc. Unfortunately, none of them is universal and results will depend on your personality.

A proper risk management will save you a great deal of emotions. Always make sure that you don't risk too much money on any single trade and that the combined risk for all open positions is not overextended.

How should one prepare mentally for trading(financial markets)?