Psychology of a Professional Trader (Part 1)

When I began trading live I believe I became my own worst enemy – sabotaging certain successful trades into losing trades because I became emotionally involved in the outcome.

My issue was specifically closing out winning trades too soon and hanging on to the losing trades too long.

I read many books on the subject of the psychology of a trader and realized that most of those books were written by psychologists who dealt with traders who had one issue or another on my same matter.

The writers of these books were individuals who did not actually trade. Believe me (and I am sure you will agree) there is a difference.

The recent webinar with our members was quite exciting since it covered certain psychological traits that a successful trader could utilize in our quest for success through trading.

It was all based on my own personal experiences and while there was so much content I had to condense it a bit so here we go.

The stock market is and continues to be an enormous source for the generation of wealth.

It is a place to conduct business and having that business mindset will enable us to see trading differently than if we were participating in a hobby.

What I mean by a hobby is we are casual about our trading parameters especially in the area of money management and virtual trading.

We can however swing in the other direction and that is that we find ourselves to be reaching “information overload on the market.”  We need to get up first thing in the morning to see how the market closed and if it rallied we need to know why. So we read everything we can about the markets.

That other side of the coin can be equally damaging since the markets do not behave in the fashion that most people think. The market does not respond equally to certain economic news environments.

One day housing data is a cause for celebration and the next time it is a cause for selling off the market.

Could that have been the intent all along? Could the news media be nothing more than an arena to justify market moves?

If that is the case then could we place our energies elsewhere and not allow ourselves to get “sucked” into the black whole of stock market media analysis?  It does not matter what we think, believe or feel – the market is always right.

Remember that the stock market has its own rhythm and while trading is never 100% accurate we can learn to stack the probabilities of success in our favor.

What things can we do to stack those probabilities in our favor?

(… To be continued in part 2)