STAGES OF BECOMING A PROFITABLE TRADER

1.Handling Your Emotions.

Stress and Anxiety.
Fear.
Over confidence.
Self discipline.

2.Developing a Trading Strategy.

3. Maximize profits by understanding the psychology of the traders in the market.

Trading psychology - Introduction

Prices fluctuate not because of fundamental news or technical analysis .
It is traders who move prices. How a trader interprets the news or events will govern the way in which he enters the market. By executing the trade he would either have made prices go higher or lower. For trade to be struck there must always be a buyer and a seller , obviously there can be only one winner both the buyer and seller truly believe there was an opportunity for profit when they enter into the trade if the looser does not act objectively and cut his loses he would be falling into another trap. A trap that will cost him dearly , not only financially but also psychologically .
The first and hardest to becoming successful trader is knowing how to control not the markets but your own emotional behavior towards the market .
Therefore before you start trading know your self what your strength and weaknesses are learn how to control your emotions and approach the market objectively

Trading rules

1. The market is always right
2. Cut your losses
3. Never average a bad position
4. Don’t be greedy
5. Be committed to your decisions
6. Do not be influenced by others
7. Too much analysis breeds hesitation
8. Know the difference between gut feeling and wishful thinking
9. Take a break .

Handling your emotions

Stress and anxiety

When the market is in your favor you will rarely feel any stress or anxiety but once it starts going against you the need to do some thing which will cause pain ( in this case loss of money ) will stop you from reacting , the more the market moves against you the more stressful the situation becomes and the greater the urgency to react which will finally lead to panic and irrational behavior at this point what ever you do will most likely be disasters.

FEAR

After suffering a heavy loss its normal to have a fear of the market and stop trading the need to suppress this fear is vital the longer you stop trading the more time your letting this fear to take route also you will be missing all the other opportunities to capitalize on the market.

OVER CONFIDENCE

Your first few trades are a success the feeling of being on the right side feels great and you think the trading is the thing to do.

WATCH OUT HEROES DIE YOUNG

Being over confident could be more disasterous than in being state of fear because you think you know every thing there is to know about trading and you have shut out the possibility of learning , your ego has taken over and when you eventually find yourself on the wrong side of a trade you will not be able to handle the situation of having to cut your position .
Not only have all the profit from previous trades been wiped out you might also have lost a huge portion of your initial capital if not all of it.


SELF DISCIPLINE

To avoid the feeling of stress and fear you should know exactly what you want to do before you enter the market know where you want to take your profit and more important where you would cut your losses . if prices hit your predetermine levels you must execute your liquidations without hesitation excepting the consequences of your trade even before you enter the market will alleviate the stress involved in trading in this situation even if you suffer a loss you will not feel fear having looked at the market objectively in the first place you will not be afraid to enter the market again when the next opportunity rises .