The ability to mentally detach yourself from your trades is what separates successful traders from the unsuccessful ones.
Mastering your trading psychology is the art of not letting your emotional impulses interfere with your trading plan. It is THE hardest endeavor that a trader must overcome in order to succeed.
On a demo account, anyone can be a hero and make thousands of dollars per day. But the moment you have your skin in the game, that’s when everything changes.
But how do successful traders overcome their emotions? What’s their secret?
Well, it turns out the best trading advice you can receive is from an actual trader.
Luckily, we have a team of professional traders who have gone through all the ups and downs. So, we asked them to share their three best mental hacks that transformed their trading.
One of the traders we asked said something interesting that sums it all up:
“If you want to make money in the markets, you first need to fix your mind.”
Here’s how:
- Detach yourself from your trades
The ability to mentally detach from your live trades is the most important characteristic of a professional trader. The easiest way to eliminate your emotions while trading is by simply walking away from the charts.
If you are a day trader; enter your trade, set your stop-loss and take-profit orders, and go for 2 hours walk. If you are a swing trader, set your entry and exit orders, turn off your computer and leave it be until tomorrow at least.
Letting your trades to play out without your involvement is critical to your success.
Why?
Because your trading edge must operate over a large sample size of trades without your intervention, in order for it to be effective.
- Trade Higher Time Frames
The fast-paced market action gives many beginners the illusion that they can make more money on the 1- or 5-minute charts. Where in fact, the higher the timeframe you use on your online trading platform, the easier it gets to find an edge.
By trading on higher time frames, you will:
- Avoid the random noise in the market. For example, the 5-minute bars are more random than daily bars.
- Avoid intraday screen time, which more often than not makes you second guess your initial plan.
- Avoid intraday price manipulations.
- Shift your perspective to the big picture, which leads to better analysis and better trade results.
- Have better control of your emotions.
- Have better risk-reward opportunities.
So, if you trade on the 1- or 5-minute charts. Try the 1-hour, 4-hour and even the Daily chart and see if you notice any difference.
- Trade Smaller
Many beginners get drawn to trading leverage in the hopes of making exponential gains!
While higher leverage may be useful, you must use it with caution to avoid “overleveraging” your account.
High leverage can work in your favor if you trade wisely.
Plan ahead of your trades. Decide how much margin you are prepared to use.
Figure how your margin levels will sway, based on the market swings you forecast to avoid unwanted surprises.
Another up your sleeve when it comes to leverage is to switch your mindset from short-term thinking to long-term.
Realize the statistical fact that by decreasing the size of your trades, you will increase the odds of your long-term success.
Trading requires endurance over an extended period of time. Those that go for short sprints can make a lot of money, but eventually they will lose it all to one major hit!
Conclusion
The main takeaway from this article is that you need to change the way you approach and think about trading.
Most traders lose money in the market out of desperation or to satisfy their “need” to make money. They start trading excessively with position sizes that are too large for their accounts and skill level.
That’s the fastest way to blow up your trading account. What you need to do is to be realistic and honest with yourself. Start small, trade higher time frames and detach yourself from your trades. If you apply these ideas put forward, with time, it will get much easier to spot a signal and pull the trigger with a stress-free and confident mindset. This is where you want to be, it’s where FinPros’ traders are, and it’s where you can be with true dedication and discipline.
