The Psychology in Trading (2024)

,It took a long time for me to understand the importance of psychology in trading.

About 15 years ago I came across a book, ‘The Disciplined Trader‘ by Mark Douglas.

It was a revelation.

I had a good grasp of trading fundamentals. Plus a strong and workable rules-based trading strategy centered on technical analysis.

Yet, after reading The Disciplined Trader (twice) I realised, in Mark Douglas’s words. That successful trading is 80% psychological and only 20% method.

It was the less obvious psychological aspects of trading. That in my first few years as a trader were letting me down.

• I started to learn that trying to find reasons why markets were going up or down was irrelevant.
• Saw how past memories, ingrained beliefs and associations were affecting my ability to succeed as a trader.
• How my fear of losing was leading to recklessness and lack of discipline.

Mark Douglas clearly states that emotion is the enemy of successful trades.

That’s why, even with a modest knowledge of fundamental and technical information, the trader in psychological control will be the winner in any trading environment.

It doesn’t matter what markets you trade, from equities to futures or FOREX, how you handle the emotional and psychological aspects that come with trading, are either going to make or break you.

Marketers will always prey on novice traders claiming they have the Holy Grail, the perfect methodology or system that will lead you to your future success.

Yet your psychological fortitude is what will set you on the right course.

And this comes from within, not from the guy selling you the latest course or product.

So start working on yourself. Get to know yourself; what motivates you, and what are your strengths and weaknesses?

And create balance in your life as life isn’t all about trading.

Meditate, spend time in nature, have other hobbies and passions, stay close and connected to family and friends, and above all, be humble and come from a place of gratitude.

The more you learn about yourself and what drives you and motivates your actions, the more likely that success will follow.