How to get over a Loss ?.. Psychology behind Traders

Trading psychology :

In this blog we will explain how emotions affect your trading decisions and what it means to be in the zone, we will also reveal which emotions influence trading the most along with the importance of discipline in trading and how to improve it.

A trader must be disciplined enough to stick to the system even throughout a losing streak a successful trader must always remember that making money does not come down to any single trade but instead a series of trades the biggest mistake that people make.

When first learning to trade is assuming that analysis of the markets allows a trader to become successful. when emotions influence a trader this inevitably affects his trading results when a trader is in a state of mind, where he is thinking clearly and uninfluenced by emotion, he is said to be in the zone the psychology of a person includes thoughts and feelings that are an incitement to act negative emotions such as greed and fear are sometimes inevitable and when trading they can prevent you from making  an objective decision especially in the beginning when a new or an unskilled trader is likely to experience feeling overwhelmed by fear for this reason learning how to control your emotions becomes paramount to successful trading.

The trading process is sometimes broken down by Dr. Van Tharp chart which includes three categories.

System accounts for 10%

Money management accounts for 30%

Psychology is the most heavily weighted at 60%

The fact that the actual trading system is ranked the least important by Dr. Van Tharp suggests that regardless of how successful a strategy is if psychology impedes your ability to follow a plan properly it can be the case that it will not make money.

Greed and Fear :

 The two most common negative emotions are greed and fear these emotions can cause a trader to deviate away from their plan greed can have a negative impact on your trading because you may think you can squeeze out more profits than your trading plan accounted for by doing this your trade will not close at the predetermined profit level but in fact the price can reverse back to your entry point or worse your stop-loss an example of fear could be that you close a trade before your profit target while you were a few pips in profit because you were afraid that the price may turn around and leave you with a loss though you may feel you have made a profit by doing this your stop loss has not been accounted for and money management outlined in your trading plan has not been followed for example if you closed a trade for a small profit compared to your stop loss because fear played a factor you could wipe out all of your profits with one single loss some traders always want to be right.


which is where ego becomes a factor if the price moves in the undesired direction you may not want to necessarily close a losing trade because of fear but this may be because you do not want to accept the fact that you made a wrong decision consequently being  forced to accept a loss may lead to deviating from a trading plan just to get the money back such behavior is called revenge trading.

Which more often leads to further losses this is usually observed when the trader exhibits the behavior of taking trade after trade without any consideration of the trading plan a trader success depends on discipline in taking trades.

Discipline is the key :

When a system tells them to even through a losing streak a strategy with a 100 percent winning ratio is unrealistic and you must be prepared to take some losses therefore having confidence in your system is essential and this can be developed by using a demo trading account trading with a tried and proven system and accepting risk so far you have learned that emotions affect trading decisions therefore personal psychology is the most important part of trading controlling emotions is vital to avoid rush trades and undesirable losses.

Profitable trading strategy may fail if the trader allows fear and greed to become overwhelming you also learn that discipline is the key to consistent trading results and finally important factors that influence traders discipline our confidence in his tested strategy the ability to accept the risks involved and knowledge from research and analysis you.