psychology of successful traders

Many traders don't realize that the trader's psychology is a key factor in differentiating a successful from an unsuccessful trader. This is most times taken lightly, but you should not. You must learn and understand as soon as possible that, the sooner you are able to control your emotion, the sooner you will start to profit. I believe that the investor's psychology is even more important than knowing and having all the other skills to trade in the market.

Jesse Livermore, considered one of the greatest traders that ever existed, faced bankruptcy at least four times because he ignore his own rules. Why would he ignore his own rules? It is not that he deliberately neglected them, but at some point with so much at stake, his emotions took over his mental control and he reacted in instinct without a proper and careful analysis of the situation. Don't get me wrong, instincts are also a mandatory skill to have if you want to become a profitable investor; but sometimes they can jeopardize your performance by making you take actions that maybe you wouldn't, if you were in a more relaxed and calm state of mind.

Jesse Livermore was one of the greatest and even he admits that every single time that he has lost big money in the stock market, it was because he disrespected his own rules. I'm not talking about small losses that every trader must get used to have, but those big losses that completely change the game and it might even end the game for you.

This psychology factor is the reason why only by trading with real money will teach you all the lessons that you must learn before becoming a prosperous trader. When real money is at stake, is like having all your worst fears coming to seat right next to you, watching that blinking screens with numbers flying around. Imagine what professional and big time traders must go through when they have a lot at stake and maybe are leveraged 20 to 1. No wonder why many professional traders and hedge fund managers have cardiac problems later on life.


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