The Importance of Trading Psychology

#1
Many skills are required for trading successfully in the financial markets. They include the ability to evaluate a company's fundamentals and to determine the direction of a stock's trend. But neither of these technical skills is as important as the trader's mindset.
There are two main emotions to understand and keep under control: Fear and Greed.

Understanding Fear
When traders get bad news about a certain stock or about the economy in general, they naturally get scared. They may overreact and feel compelled to liquidate their holdings and sit on the cash, refraining from taking any more risks. If they do, they may avoid certain losses but may also miss out on some gains.

Overcoming Greed
There's an old saying on Wall Street that "pigs get slaughtered." This refers to the habit greedy investors have of hanging on to a winning position too long to get every last tick upward in price. Sooner or later, the trend reverses and the greedy get caught.

Conducting Research and Review
Traders need to become experts in the stocks and industries that interest them. Keep on top of the news, educate yourself and, iif possible, go to trading seminars and attend conferences.

Devote as much time as possible to the research process. That means studying charts, speaking with management, reading trade journals, and doing other background work such as macroeconomic analysis or industry analysis.

Knowledge can also help overcome fear.
 
#2
Exactly!
Fear is somewhat obvious while trading. But with the increase in knowledge, fear will gradually decrease.
Greed is something which one can overcome only after understanding that the stock market is not a gamblers’ place.
Research and Review can be done only after proper knowledge of the stock market.
 
#4
Many skills are required for trading successfully in the financial markets. They include the ability to evaluate a company's fundamentals and to determine the direction of a stock's trend. But neither of these technical skills is as important as the trader's mindset.
There are two main emotions to understand and keep under control: Fear and Greed.

Understanding Fear
When traders get bad news about a certain stock or about the economy in general, they naturally get scared. They may overreact and feel compelled to liquidate their holdings and sit on the cash, refraining from taking any more risks. If they do, they may avoid certain losses but may also miss out on some gains.

Overcoming Greed
There's an old saying on Wall Street that "pigs get slaughtered." This refers to the habit greedy investors have of hanging on to a winning position too long to get every last tick upward in price. Sooner or later, the trend reverses and the greedy get caught.

Conducting Research and Review
Traders need to become experts in the stocks and industries that interest them. Keep on top of the news, educate yourself and, iif possible, go to trading seminars and attend conferences.

Devote as much time as possible to the research process. That means studying charts, speaking with management, reading trade journals, and doing other background work such as macroeconomic analysis or industry analysis.

Knowledge can also help overcome fear.
These aspects are very important to consider in trading. Fear should be overcome with the proper knowledge and research. Greed to make quick profits should be eliminated and hard work should be done.
 
#5
Exactly, Thanks for listing these points.
Fear is obvious while trading. Getting Knowledge is the only way to gradually decrease this fear.
The stock market is not a gamblers’ place, you have to invest your time and efforts into it. Trading is easy for those who never stop learning it.
 
#10
Trading without emotion or becoming emotionless is something that you read a lot about and it is often promoted as a goal but I think taken too literally it is something largely unobtainable. Most people are emotional creatures. The trick is to learn to control them rather than banish them altogether. This is still a difficult task, especially when it comes to money. But by reading books and practicing to the point of monotony it can be achieved.
 

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