10 Trader Psychology Tips To Help You Stay Out of Trouble

I hope you all had a good weekend. In this quick post, I’d like to share 10 trader psychology tips that will help you stay out of trouble this week.

Trader Psychology Tip #1 –

Don’t Force Trades.

No matter how hard you want to identify a trade that will go on to make your week or month, you can’t force it to materialize.

When you badly want something to happen, it’s very easy to convince yourself that you’re actually seeing what you want to see.

So relax the neediness, trust your plan, and let the market show you its hands – it will. There will be plenty of opportunities that will jump at you just because of how clear they are. Reserve your ammunition for those instances.

Trader Psychology Tip #2 –

Pick Your Battles Wisely.

Quiet up trending markets are forgiving and easier to trade. But they’re not wildly profitable.

Volatile markets are vicious and require more experience and skill. But in return, they can deliver fast, outstanding gains.

Our challenge as traders is to find the right balance between profitability and risk; between boring trading and emotional trading.

So, figure this out, and if volatility creeps in, don’t hesitate to sit it out.

Nothing wrong with waiting for the dusk to settle and being ready for the low hanging fruit—when everything is just beaten down and ready for the grab.

Trader Psychology Tip #3 –

Tune Out the News.

Once you have trades on, you have got to learn to let go and let your trades work for you. You have to give them a chance to do so without letting short-term variations in your PnL get to you.

Personally, it’s one of the reasons why I never pay attention to news, and in terms of my mindset, it makes a huge difference.

When I pay attention to news, I become more neurotic, doubtful, and less at ease. I become obsessive and outcome-oriented, which causes me to micro-manage my positions.

Now, it’s true, sometimes, overnight events can create large gaps and I can get hurt.

And this often leaves me thinking “I should be paying more attention to news.”

But it works both ways: gaps can also be in my favor.

So in the end, it doesn’t change much to my trading whether I pay attention to news or not.

Trader Psychology Tip #4 –

Focus on Your Own Method and Analysis.

So, news is a form of noise.

We’ve established that.

But then, what about the traders you might be following on social media?

They share valuable insights about the market, don’t they?

Here’s the thing: The great abundance of styles, methods, and analyzes shows that there is not a one-and-only way.

Hence, everyone has a unique perspective to offer.

An attitude of openness to diverse approaches and a willingness to learn from different perspectives can only help inform your own understanding.

But the problem is that you must not allow those different opinions to determine what decision you ought to take when it comes to the trades you have on or plan on taking.

At all times, you must prioritize your own plan, method, and thinking over that of others. No matter how expert these people are.

If you want to consider their viewpoint and change your method accordingly, do it when the markets are closed and when you don’t have any trades on.

But don’t just take things at face value, in the heat of the moment. It’s a recipe for disaster.

Trader Psychology Tip #5 –

Take What The Market Gives.

Personally, I have found (anecdotally) that I tend to generate a more consistent and positive performance by having trading goals that are more modest and reasonable.

For instance, when trading my short term trading strategy, I look for home runs, but at the same time, I’m also very glad to take small profits here and there.

In other words, when you try to be a big home run hitter all the time, it increases the likelihood of having lots of losses (strings of them), which means a very low win%.

As a direct consequence, this can have a negative effect on your mindset.

When you’re trading with a compromised mindset, the likelihood that you’ll do things that will derail your long-term performance increases.

Trader Psychology Tip #6 –

Don’t Hesitate to Put That Trade On.

You don’t learn to play the guitar within 2-3 months of sporadic playing.

No, you develop the skill over time, through consistent practice.

Trading is similar. If you want to develop skills and get better at trading, you need to trade more often.

In fact, for this reason, day traders tend to learn faster than swing traders or position traders. That’s because day traders get to trade more often. They get to experience and practice.

Don’t get me wrong: I’m not saying that day traders are more profitable or that day trading is easier.

What I’m saying is that statements like “It takes years to become a proficient trader” are overdone.

While it does take time to learn to trade, it is practice that makes you better, and you can get plenty of practice if you just take your trades where you’re supposed to.

It’s very difficult to learn if there are weeks or months between your trades. You know?

So don’t hesitate to put that trade on. Keep your risk under control, and seek to learn from whatever happens.

Whatever direction you’re betting on, if you’re trading when the risk vs reward is good and the probabilities are in your favor, you’re doing it right.

And, speaking of risk, here’s my trader psychology tip number 7.

Trader Psychology Tip #7 –

Protect Your Trading Account.

Don’t shy away from taking losses. Make sure they’re small and manageable so that you’re not booted out of the game.

If you blow up, you can’t learn, grow stronger, and transcend what limits you. But above all, you close yourself to future lucrative opportunities in the market.

So make sure you manage your risk well.

As a general rule, your sizes should not be too big and not too small. Like Goldilock… not too hot, not too cold.

Try to strike a right balance, a place where losses don’t have the power to destabilize you on an emotional level, and yet, where gains are still meaningful.

If you can trade within that zone, the magic will happen.

Trader Psychology Tip #8 –

Take it Easy.

Don’t be too fixated on hitting a daily/weekly/monthly monetary goal. By doing so, you are raising your levels of stress unnecessarily.

Just accept what the market gives and see how that goes.

Trading is as easy or as hard as you make it.

  • Don’t put too much hope in your analysis.
  • Focus on showing up.
  • Take trades with good risk vs. reward potential.
  • Think long term.

That’s the secret.

Trader Psychology Tip #9 –

Enjoy The Journey.

Some people get into trading and immediately hit a jackpot.

Some people get into trading and immediately lose everything.

Some people get into trading, lose a lot, but then go on to make a lot more.

Some people get into trading, win a lot, but then go on to lose a lot more.

You’re not behind, you’re not in front. You’re not too late, you’re not too early.

You’re right where YOU are. You’re on time. So relax and enjoy your journey.

Trader Psychology Tip #10 –

Take Care of Yourself.

In trading, mindset is incredibly important.

Don’t overlook it.

Here’s what I recommend:

  • Keep your workspace clean.
  • Listen to music that calms your mind.
  • Spend time with people that support you.
  • Follow influencers that inspire you and help water the good seeds in you.
  • Read books that expand your mind.
  • Eat healthy.
  • Sleep a lot.
  • Exercise a lot.
  • Meditate.

All of these things will positively impact your ability to make clear and rational decisions in the face of uncertainty.

Also, develop a positive state of mind. Look at the positives in every situation. There is always a reason to smile.

Never take a recent period of winning for granted. The tide will change. Be prepared and ready.

Act consciously and consistently, and do your best not to fall back into some old patterns of yours.

Toxic habits and behaviors always try to sneak back in when you’re doing better.  Stay focused.


trader psychology

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