Trading Psychology

(This is an mini article series to encourage traders to learn how to be a better trader written by Eric Lye)

Trading psychology   has been a big topic in the trader's world.  However, there are too many that use it as an excuse for losing.  Like we always said, trading is a business. Do you blame on your psychology when things are not working well in your business?


Clearly, any successful business man will tell a straight "No!".  


Making losses can be due to wrong assessment of the market, bad execution, or lousy management or making decision at the wrong timing or with wrong basis.


To make good assessment (notice I didn't say right assessment) of the market, you need to have good understanding of the market and how you approach the market.


To repeat good execution, you need to know the exact mechanics of the way you trade.  Good techniques and skills come from relentless practices and training.


To manage properly, you need to understand your risk and how you should manage your money.  Know when to be aggressive and conservative.  The market is dynamic, you can't have just a single mindset to deal with it.  Adaptability becomes the key.


To make the right decisions, you need to know yourself, your own character and choose the right opportunities to make trading decisions ("choose your old battle ground, do not fight all battles") with sound basis and never (almost) by emotions.


In summary, trading psychology to me is all of the above.