Psychology in trading: characteristics of a good trader
Check the following characteristics to learn how good trader you are and be your own trading psychology coach:
Invest what he you afford to lose:
A good Forex trader will invest only what he/she can afford to lose. That is the basis of trade psychology
Analyze before entering a trade:
A good trader will conduct a deep analysis with the help of either fundamental analysis, technical analysis or a trading psychology coach. This trader will observe the economic news releases carefully and wait for a suitable time to enter into a trade and thus profit from the movement of prices.
Use Take Profit and Stop Loss:
A good trader will use Stop Loss and Take Profit orders to prevent a trade from further losses. Many traders neglecting Stop Losses suffer from hitting Margin Call and some keep on increasing Stop Loss as the price approaches it. Do not underestimate trade psychology.
Won't risk more:
A good trader won't risk more and takes only low risk which helps them to reduce big losses. They won't open the trade immediately after a loss and thus they risk only with minor amount.
Avoid emotions take you over:
Usually, emotions have a little impact on good traders because they have clarity about risks they take per particular day. If a trade goes wrong, they will stop trading and wait for a suitable moment to enter market. They trade with cool mind and know when to enter and when to exit the market.
A good trader will try to withdraw some amount of profit frequently in order to save money.
Many people will increase the Stop Loss if they experience a loss. But good traders won't adjust SL every time and they sticks to it accepting the losses.
Using suitable leverage:
A good trader uses the leverage that fits his/her trading style. It means that this trader won't take more risk by using a higher leverage.
Trading at suitable time:
Good traders will trade only at suitable time and they won't make trades in a hurry manner.
Conclusion: the above are just basic characteristics which are essential for a good trader but we cannot claim that the above statements are true and applicable for all situations.
The above article is for information purpose only and is based on personal opinion of article writer.