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Jul 01

full time trader trading psychology

trading psychologyI would think trading psychology is the utmost important factor to a full time trader albeit a successful trader. Of course, you would need technical knowledge in trading of equities and instruments in general, but it is the traders’ psychology that determine a trade altogether – his/her decision to select which portfolio, which stock to watch, timing to open and close, which strike price to choose, what price to cut, take profit or cut loss. These are the decisions one trader has to make, and there could be more.

I was once told that you may be systematic in your job, gentle behind the wheels (not a road-bully!), tolerate and respectful in your living, but when you sit in front of your computer, trading online, you are a different ANIMAL. Lol…. I believe!

Let me relate the above to myself. I am an accountant by profession. You know.. how a typical accountant works, I’ll spare you the details. But put me in front of the trading screens, I am like a live wire. Maybe it’s adrenalin push, maybe it’s the thrill of winning, maybe it’s the thrill of trading, but I am definitely not myself in front of the screens, clicking away my thoughts. Taking a step back and looking at the way I traded, it’s like seeing a double physical me but another cognitive psychological me. Phew…. scary! Why so? Because of the way I traded – I managed to wipeout my account a few times (haha, my guru once told me that in the lifetime of a trader, one should at least experience that, and I did, not once but almost a handful times). You know… all options expiring worthless, out of money!

I thought I have the system, the discipline, the mindset of a trader, but the fact is I don’t. It took me years and am still trying to reinforce the psychology barricade for my trading so that I follow my own set of rules and don’t wipe out my account again. And I am seeing some results. May not be perfect as yet, but am seeing some differences in my trading psychology. I remembered reading a book once from Dr Alexander Elder titled Trading for a Living, recommended by Mervin when we first started to options trade. It is a self-help book for continuous self-improvement in one’s trading. What I liked most about the book was about the psychology part of being a stock trader. Heck, I might as well go read it for a second time just to refresh and reinforce myself psychologically.

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