Trading is a business, not a leisure activity. Like any other business, preparation is the key. A trading plan is a contract you enter into with yourself. Think of your trading plan as a guide for success. Plan your success, not just what you want to achieve. Since traders are independent businessmen, they do not face many challenges related to organization. Find out many traders, like all businesses, need a business plan.
Trading Psychology, Discipline & A Trading System are three important factors that we must deeply embed in our heads – along with our trading plans.
The mind is your main trading asset. How are you going to maintain your focus throughout your career as a trader? How can you avoid burnout and protect your mind? How much time and when will you leave for a vacation or pause from trading? Then you can either take a short break or vacation. What if your account experienced a significant loss? Other things outside of trading may have an impact on your emotional state. Can you cope with their emotional impact? This is because emotional decisions can have the largest impact on profits. To protect yourself from such risks, it is crucial to create a trading strategy.
Average traders do not give much thought to their trading psychology. This is a major aspect of the business. Even for the most experienced of traders, it is very difficult to keep emotions out of the markets. Greenhorn traders will feel a lot of emotion when entering the market for the first time. They include anxiety, fear and panic. These include joy, satisfaction, even greed. Keep your emotions in check and follow the plan. Lack of emotional balance makes it hard to make the right decisions.
What’s your reason for trading? What is the reason you trade? What are your goals in trading? You are trading for money or for pleasure, but why? Understanding your trading motives in advance will enhance and allow you to better enjoy the process. Markets are often approached with unrealistic objectives by novice traders. Some traders view the stock market as a quick and easy method of earning money. Although they might start off well, their lack of strategy will ultimately catch them up.