trading psychology.jpg

Trading Psychology

It is important not to get upset when you are suffering loss after loss because that might lead to you digging yourself into a deeper hole. The same goes for a really good day. It is just important not to become over confident when you are on a winning streak. Studies show that as investors experience win after win, they are more likely to accept a greater risk and that could lead to a major loss.

To avoid becoming over confident, it is important to develop a strategy and to stick to it, no matter how well or poor the market is doing. A good tip regarding trading psychology is to set a maximum amount before the market opens that you are willing to lose. If you happen to reach that amount, then stop trading and take a break until the next trading day. Investing is a slow process and should not be rushed.