Human beings are very mysterious. Science can’t define our minds. Everyone has a different way of thinking and they see the world from a different angle. When human minds start interacting with the global trading industry, it becomes complicated. Millions of retail traders are taking millions of trades every day. The big players in the market also have a different mindset. Such intense variation in the participants of the market creates a massive level of uncertainty for novice traders. But the smart traders have developed a systematic way to analyze the market sentiment. But we are not going to discuss the market sentiment. We are going to discuss some amazing techniques you can avoid the psychological mistakes that have the potential to blow up your trading account.
Losing love for the money
You might not have heard such statement in real life but if you trade long enough, at times you will be hit by the market. You will lose more than 50% of the capital in your account. At that point, some of the trades become so frustrated that they don’t even care about the remaining portion of the capital. They increase the lot size as much as they can start trading based on luck. They have guaranteed that they will blow up the trading account. But losing 50% of the account is not the end your trading venture. You can still come back and manage to make big profits with some smart moves. In order to protect your capital and take quality trades, you must love your money.
Never become frustrated when you lose a big chunk of your investment. Look at this site and analyze the portfolio of the successful trader. You will notice some of them have a series of losing trades but they never increased the lot size to recover the loss. Learning to control your emotion in such a situation is very hard, but you must learn how at any cost.
Not believing in yourself
Rookies often stop believing in their skills. They doubt their trading method and focus on different tactics to make money in trading. But this is not the proper way by which you can take the trade. In order to protect your trading capital, you must learn to take the trade with managed risk. Try not to risk a high amount in each trade as it will cause you a massive amount of trouble. Follow a conservative trading technique and believe in your skills. Losing trades is nothing. Rather, it’s an opportunity for you to learn new techniques.
Stop focus on the losses and try to come up with a solid plan. The plan should allow you to trade with low risk and you must feel comfortable with the plan. Never put yourself in an uncomfortable situation because if you do so, you will be in big trouble.
Trading with emotions
The retail traders always trade with emotions. They even don’t know that they are executing the trades with a high level of emotion. If you take look at the pro, you will never find them taking trades with emotion. Having an emotional attachment to the market is a serious mistake. Being a novice trader, it’s normal to have some emotional attachment but you should learn to control your emotions. The best way to tame your emotion is to get yourself prepared to lose money. Having high expectations from each trades puts you in a very uncomfortable situation.
Always stay relaxed and trade with money that you can afford to lose. Try thinking about the worst possible outcome and it will control your greed. To control your fear, you can think about the potential reward for the trade setup. Just try finding the balance between the losers and the winners. It might be tough, but it is possible to do this in less than a month.