Psychological Make-up

The psychology of trading is about the psychology of beliefs , strategies and behaviors. Trading is a mental and physical game which provides an intellectual with physical and emotional challenge of the highest order. This is absolutely true …

What is your reason for trading ? How does losses affect you ? It all depends on your psychological make-up. If you have fear of losing or fear of failure , this may have built upon itself. On the other hand , if you are more resourceful in such circumstances , losses can be an excellent opportunity for learning.

Our psychology determines the way we trade , the way we handle risks , how we react to volatility , and how we deal with losses if they occur. It is between maximizing profits or minimizing losses. Trading is really about maximizing profits at a managed level of risk. Proper education and hard work as well as analysis can help us understand and minimize risk.

Psychological make-up does not only include emotion , but also philosophy of life. Stock markets is like battlefield. Coolness under fire is a key requirement in order to win the battle in the market. The saying goes - ” if you can’t stand the heat , stay out of the kitchen ” Same goes for trading - if you can’t stand the emotion , as well as volatility , stay out of the market …