It took me 2 years to understand that #trading psychology is as important as the #tradingstrategy or even more!!
Don’t do the same mistake that i did!!
@madan_kumar's #tradingpsychology video on YT completely changed my view towards trading.
#nifty #banknifty
Read on .... 🧵
Don’t do the same mistake that i did!!
@madan_kumar's #tradingpsychology video on YT completely changed my view towards trading.
#nifty #banknifty
Read on .... 🧵
Important psychology lessons from him that will definitely transform you to a better trader. 👇
Ask yourself this question..
If you are trading to make money, you should have a plan & stick to it. You should think long term & review your process in 6 months or an year. 1/16
Ask yourself this question..
If you are trading to make money, you should have a plan & stick to it. You should think long term & review your process in 6 months or an year. 1/16
Revenge Trading
Never put on a trade that is out of the plan. Market doesn't even know you. If you have been having losing streaks stick to your plan.
Market is not a human that you can punch in the face. 2/16
Never put on a trade that is out of the plan. Market doesn't even know you. If you have been having losing streaks stick to your plan.
Market is not a human that you can punch in the face. 2/16
Cutting winning trades short.
People don't want to lose the money as soon as they see they are in profit, so they think to take whatever profit has been made till now.
Markets are truly random in nature, you don't know whether it will move in the same direction or revert. 3/16
People don't want to lose the money as soon as they see they are in profit, so they think to take whatever profit has been made till now.
Markets are truly random in nature, you don't know whether it will move in the same direction or revert. 3/16
Gambler's fallacy
Markets are random in nature. However, traders try to predict the outcome of the next trade based on the outcome of previous trades.
For ex, a trader with a winning streak of 8 days doesn’t take the 9th trade thinking that the trade will be a loss trade. 4/16
Markets are random in nature. However, traders try to predict the outcome of the next trade based on the outcome of previous trades.
For ex, a trader with a winning streak of 8 days doesn’t take the 9th trade thinking that the trade will be a loss trade. 4/16
Loss Aversion
The pain of losing is greater than the satisfaction of gaining.
That’s how the brain works that loss is bad, It should be avoided. That’s not how trading works and it leads to suboptimal decision making. 5/16
The pain of losing is greater than the satisfaction of gaining.
That’s how the brain works that loss is bad, It should be avoided. That’s not how trading works and it leads to suboptimal decision making. 5/16
Herd Bias
Following the herd is the most common mistake.
If a trader has a long position and majority on Social media think the opposite, the trader gets in a doubt. He closes his positions and takes a short position.
Stick to your process! 6/16
Following the herd is the most common mistake.
If a trader has a long position and majority on Social media think the opposite, the trader gets in a doubt. He closes his positions and takes a short position.
Stick to your process! 6/16
Endowment bias.
A product that you have bought for 100Rs, you will never becomfortable in selling it below 100Rs.
The same applies to trading, people are not comfortable selling the instrument on a price lower than their buy price. 7/16
A product that you have bought for 100Rs, you will never becomfortable in selling it below 100Rs.
The same applies to trading, people are not comfortable selling the instrument on a price lower than their buy price. 7/16
Drawdown
Drawdown is inevitable in trading.
Traders hop systems or tweak their strategy if they are in a drawdown.
Drawdowns eventually end and traders hit new equity high if they stick to their well backtested system in first place. 8/16
Drawdown is inevitable in trading.
Traders hop systems or tweak their strategy if they are in a drawdown.
Drawdowns eventually end and traders hit new equity high if they stick to their well backtested system in first place. 8/16
Draw “Up” / Winning streaks
A trader in a winning streak becomes over confident and increases his position size abnormally or number of trades or falls for gambler’s fallacy.
Avoid this.
Learning : Stick to your positon sizing and plan. 9/16
A trader in a winning streak becomes over confident and increases his position size abnormally or number of trades or falls for gambler’s fallacy.
Avoid this.
Learning : Stick to your positon sizing and plan. 9/16
Don’t try to be a perfectionist trader.
Accept the randomness of the market and follow your plan.
Don’t try to perfect each trade by thinking later on that i would have probably increased my positionin this case or kept a different SL. 10/16
Accept the randomness of the market and follow your plan.
Don’t try to perfect each trade by thinking later on that i would have probably increased my positionin this case or kept a different SL. 10/16
Stay calm, Rehearse your mind.
Visualise your trade going in profit.
Visualise your trade going to hit your SL.
Visualise your trade reversing from profits to loss.
Visualise yourself entering and exiting your trade. 11/16
Visualise your trade going in profit.
Visualise your trade going to hit your SL.
Visualise your trade reversing from profits to loss.
Visualise yourself entering and exiting your trade. 11/16
Protect your emotional wealth
Proecting your capital is important in trading but protecting your emotional quotient of the mind is important as well.
Trading can take toll on your mental health which will eventually reflect in your trading account. 12/16
Proecting your capital is important in trading but protecting your emotional quotient of the mind is important as well.
Trading can take toll on your mental health which will eventually reflect in your trading account. 12/16
Personal Expense Pressure
Have sufficient back up if you trade full time.
Trading results should not be equated to personal expenses else it puts pressure on you to generate profits consistently which is not true in trading.
Paying utilities bills/rents/fees is a BIG NO! 13/16
Have sufficient back up if you trade full time.
Trading results should not be equated to personal expenses else it puts pressure on you to generate profits consistently which is not true in trading.
Paying utilities bills/rents/fees is a BIG NO! 13/16
Focus on the process.
Have proper risk management.
Proper entry plan.
Proper exit plan.
Have backups.
Stick to the process.
Don't focus on monetary gains. 14/16
Have proper risk management.
Proper entry plan.
Proper exit plan.
Have backups.
Stick to the process.
Don't focus on monetary gains. 14/16
Thanks for reading!!
It would mean the world to me if you follow me(@THEH0NESTTRADER)
Like + RT the tweet above to spread the trading knowledge with others👆
I take personal time out of my day to make these for you for FREE when others are charging for the same info. 15/16
It would mean the world to me if you follow me(@THEH0NESTTRADER)
Like + RT the tweet above to spread the trading knowledge with others👆
I take personal time out of my day to make these for you for FREE when others are charging for the same info. 15/16
Note : Apart from self learning, my trading learning curve was shortened because of few successful traders present on twitter. It would be bad on my part if don't give due credits to them for my success.
Follow them
@kirubaakaran
@vishalmehta29
@madan_kumar
@DestinedMusk
16/16
Follow them
@kirubaakaran
@vishalmehta29
@madan_kumar
@DestinedMusk
16/16
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