Trading Psychology – 11 Things that Separate Winners from Losers

Trading Psychology – 11 Things that Separate Winners from Losers

We are trading bigger trends and there is a less of a time crunch to get into and out of positions. The flip side is that the reward potential is higher with day trading because the account is being compounded much quicker. But based solely on time it takes to learn, I would probably say swing trading is a bit easier. Open a futures account with at least $8,000 or more if day trading ES futures. For other futures contracts, your broker may require additional margin, so you may wish to start day trading with at least $10,000 to give you some flexibility in what you can trade.

There's an old saying on Wall Street that "pigs get slaughtered." This adage refers to greedy investors hanging on to winning positions too long, trying to get every last tick. Greed can be devastating to returns because a trader always runs the risk of getting whipsawed or blown out of a position. Market psychology refers to the prevailing sentiment of financial market participants at any one point in time.

Sadly, while this is a romantic idea, it is a fallacy. When I give a presentation, I ask those present if they want me to teach them what the 10 percent of traders know or the other 90 percent, and every time they say the 10 percent. To me, the answer to understanding the 10 percent is simple - all you need to do is look at all the books and courses available and pretty much don't do most of it. Julius, price action isn’t a strategy as much as it is a style. There’s no harm in using multiple trading strategies, but it is a good idea to learn one or two at a time.

I was doing very nicely until, as all those books said I was going to do, I took a chance. I had actually put about 35% of my account into one stock and it was Frontier. I “knew” Frontier couldn’t go out of business, I “knew” Frontier could survive their problems after they bought a portfolio of non paying accounts from Verizon. What I didn’t know was that Frontier was going to do a reverse split of 1-15 and that did me in.

One of the first questions out of aspiring traders lips, is ‘how much capital do you need? ’ The one requirement of day trading from home for a living is capital. Roll back the dice a few years and you needed a minimum of $25,000 to start day trading in the US. Not only that, but you always had to maintain at least that amount in your account. A day trader is on his own in this big trading world.

Golden Rules of Trading Discipline

Day trading is one of the few career choices where you are not guaranteed a paycheck, and you may even lose money after investing hours of your time. Trading psychology refers to the state of mind of traders when they are active in the financial markets and how this affects their trading decisions. This psychological side of trading is often overlooked.

Leave your comments so we can address your questions on money and day trading. So if you are trading options where the premium is typically about $1, then you need at least $10,000 to start (assuming, you want to risk 1% per trade).

Currencies are available for trade 24 hours a day, 5 days a week. Being that the currency market is the largest market in the world, with daily volume of $5 trillionbeing bought and sold, the liquidity makes it an attractive day trading alternative.

• Remember, it only takes one person somewhere on planet earth to decide that the stock should go higher or lower.
• The best way to start Forex trading, in my opinion, is to learn all you can before opening a live account.
• Since I am my harshest critic I would then follow the stock that I decided to pass on to see how it would perform.
• To be successful in trading, one needs to understand the importance of and adhere to a set of tried-and-true rules that have guided all types of traders, with a variety of trading account sizes.
• Aspiring traders should beware of websites and courses that promise foolproof day trading success or endless profits.

I’m taking a serious look back on if I actually want to start a hedge fund and quite frankly, realistically, that will never happen. You can’t make a hedge fund from one person, but not if you’re already a billionaire (or something close). Wish I could say it would be super easy, but it’s not.

This is only because, after the pullback, I go back to trading loosely and with confidence. It only takes one trader with enough capital to completely invalidate your analysis. It doesn’t take a herd of people yelling and screaming on the floor or placing thousands of trades over the internet. Remember, it only takes one person somewhere on planet earth to decide that the stock should go higher or lower. This is the phase where most traders will spend their entire careers.

Check the economic calendar, and make a note on your chart of when major events occur that day. Exit trades at least three minutes before a major economic event. In looking for a type of investment that would deliver quick returns, I discovered penny stocks. When I was in high school, my parents let me invest the $12,415 dollars I’d been gifted (lucky, I know) in bar mitzvah gift money. But I devoted myself to truly learning how to trade.

It is “weird” how fast one can recuperate from a loss if one keeps the loss small. There is really no reason to worry about trading in the long run as long as one can last the long run. One good trading day can carry the whole week or month. Piecing together the successful methods that work for others can make you a stronger trader.

Because the fact remains that 2% works well with stocks not in forex. The reason is obvious of lower leverage than forex market. Let’s assume for a moment that you move forward with your plan to start trading Forex with $100.

However, globalisation of the financial industry has allowed numerous platforms to develop outside of US regulation. Today then you can start with as little as a $1,000 in your account. Strategy – You need a strategy that suits your trading style. It needs to rely on charts, patterns, and technical indicators. It needs to enable you to make frequent profits on high volume, low-value trades.

For futures trading, if you trade a contract like ES, start with $8,000 or more. Each contract has different margin requirements, so if trading different contracts start with $10,000 for some flexibility. In reality, another survey showed that 70% of traders believe that admitting their problems to the management would only damage their career and consider just quitting their job instead. A survey among 291 traders revealed that stress resistance is one of the top-5 most important characteristic of a successful trader.

In fact, I encourage you to read my 10 top share tips that will dispel many of the myths that are holding you back from achieving long-term wealth when trading the stock market. Anyone who starts down the road to becoming a trader eventually comes across the statistic that 90 percent of traders fail to make money when trading the stock market. This statistic deems that over time 80 percent lose, 10 percent break even and 10 percent make money consistently. Trading full-time is not about over-analyzing and over-trading, it’s about being a “sniper”; making sure everything is as “perfect” as it can be before risking your money. Focusing your efforts on trading higher time frames will give you a much better perspective on the markets and will greatly reduce the amount of trading mistakes you make.

It shouldn't take more than three minutes to read through them. Think of the exercise as reminding you how to conduct yourself throughout the trading session. You should strive to attain discipline if you ever hope to achieve any level of trading success. Trading discipline is practised 100 percent of the time, in every trade, each and every day. It is up to every trader to establish a pre-market routine and build strong trading habits.

Nial Fuller is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 20,000+ students since 2008. In 2016, Nial won the Million DollarTrader Competition.Checkout Nial's Professional Trading Course here. For almost 4 years, I have shared all my technical price action trading strategies with the public in my trading course and members’ community.