Trading Psychology: Beyond the Basics
The psychology of trading is often overlooked but forms a crucial part of a professional trader’s skillset. DailyFX is the perfect place to learn how to manage your emotions and hone your trading psychology; our analysts have already experienced the ups and downs, so you don’t have to.
Keep reading to discover their top tips, and to learn more about:
- What is trading psychology
- How to get in the mindset of a successful trader
- The basics of trading psychology
- Trading psychology tools and techniques
Learn more about the realities of trading in our ‘Day in the Life of a Trader[1]’ videos.
Unsure of what trading style to employ? Discover your niche with our DNA FX Quiz[2]!
What is Trading Psychology?
Trading psychology is a broad term that includes all the emotions and feelings that a typical trader will encounter when trading. Some of these emotions are helpful and should be embraced while others like fear, greed[3], nervousness and anxiety should be contained. The psychology of trading is complex and takes time to fully master.
In reality, many traders experience the negative effects of trading psychology more than the positive aspects. Instances of this can appear in the form of closing losing trades prematurely, as the fear of loss gets too much, or simply doubling down on losing positions when the fear of realizing a loss turns to greed.
One of the most treacherous emotions prevalent in financial markets is the fear of missing out, or FOMO[4] as it is known. Parabolic rises entice traders to buy after the move has peaked, leading to huge emotional stress when the market reverses and moves in the opposite direction.
Traders that manage to benefit
