Master Trading Psychology

7 jun 2023

"Trade what you see, not what you think. Successful risk management requires confident biases and the courage to stick to your strategy even when the market behaves unexpectedly. As traders, we must adapt and manage the market to minimize risk and maximize profits. The market is the ultimate judge, jury, and employer."

"No position is a position. Before entering a trade, conduct thorough research and observations. Anticipate different pricing scenarios and have a clear plan for each situation. Assess how similar events have affected pricing in the past. If you don't see a favorable trading opportunity, it's best to exercise patience and wait for the right moment."

"Combatting FOMO (Fear of Missing Out). FOMO often leads to buying or shorting assets at inflated prices. Watching a coin move without your participation can be frustrating, but in the dynamic cryptocurrency market, there will always be missed opportunities. Remember, it's worse to succumb to FOMO than to experience a loss. Stay disciplined and focus on quality trades."

"Correct position sizing to avoid fear. Effective trade management hinges on proper position sizing. Many traders fall into the trap of overexposing themselves, increasing the risk of significant losses and hindering their ability to manage trades effectively. By reducing position size, emotions are minimized, and trade control is improved, ultimately leading to better overall profitability."

"Absence of emotional bonding. Trade the ticker, not the company. Emotional attachment to specific stocks can cloud judgment and lead to mismanagement. Some traders struggle to take profits when they are available or exit positions when losses are still manageable. By detaching emotionally and focusing on the objective aspects of the trade, you can make more rational decisions."

"Scaling out to reduce greed. Timing trade exits is a challenging task. Selling too soon may result in missed gains, while selling too late can turn a profitable trade into a loss. Scaling out involves taking partial gains along the way to address these challenges. It allows you to lock in profits while still maintaining exposure to potential further upside."

"Revenge trading. How can I recover? It's a common question after experiencing losses. However, the temptation to chase fast-moving coins often leads to more losses and falling further behind. Successful traders maintain discipline and objectivity, not allowing losses to impact their trade selection or emotions. They focus on executing well-planned strategies rather than seeking immediate redemption."