Train the Brain and Maximize Your Mindset
The mind is the most powerful instrument.
The right mindset is essential in trading and investing. There are certain ways to train your brain in order to maximize your mindset for its full potential in trading. Continue reading this short article for key ways to help your psyche in trading.
Self Awareness is a Revelation
Knowing yourself in the world of trading already gives you a competitive edge, because not many traders take trading psychology into account. Coming to this revelation and understanding your own personal risk appetite, can allow you to have a moment, take a step back and create a plan prior to your trade without bringing emotion into the game. After all, a large portion of volatility in trading is due to traders emotional decision making.
Immediate decision making can affect your trading choices more directly and generally causes one to make a choice they wouldn’t usually make logically. A trader can combat this issue by creating a trade plan that is realistic in a way where he or she would not let emotions affect the on-going trade. That is to say that the trader should create a strategy, or plan where if an investment is lost, they understand that this is the simple reality; because, after all, the markets are considered to be a gamble at times.
Another way to tackle this issue is to pause. Through self-awareness a trader is able to realize that some emotions can get in the way such as anger, sadness, irritation or being overly happy. In turn, when self realization of these type of emotions occur the trader should pause before making a decision so as to not make impulsive decisions that he or she might regret, or lose out on in the end.
Confidence is King
Having just the right amount of confidence can solidify your trading strategy and put your mind at ease. Confidence is a type of emotion that backs up a traders initial plan, or, with too much confidence can give a trader unnecessary emotions such as greed, or too much happiness and can lead to illogical decision making. Trading psychologist, Normal Welz writes, “Once a trade is not going the way you want it to, emotions jeopardise your actions because any uncertainty is perceived by our brain as a disturbing emotion that sometimes causes devastating actions to be triggered”. In trading acquiring confidence to be able to not deviate from the plan and make logical decisions is when confidence is considered king.
Any trader who truly takes the time to understand trading psychology and their own behavior has the potential to save time, nerves, and money. Get to know your psyche and give yourself a competitive edge in trading today.