Trading psychology
Most trading mistakes are emotional: closing too early out of fear, risking too much out of greed, or trading to win back losses. Discipline can be trained like any other skill.
The three most expensive biases
- Loss aversion: cutting winners early and letting losers run.
- Revenge trading: trading without a setup to recover a loss.
- Overconfidence after a winning streak: raising risk just before the streak turns.
The panic close
Closing a trade by hand a few minutes in, before it reaches the stop or the target, destroys the statistical edge of any strategy. If your plan had a stop, let the market decide.
How discipline is trained
- Written rules before looking at the chart.
- Fixed risk per trade, always.
- An honest record of every decision.
- Practice with consequences: penalties for breaking rules, even when the trade works out.
Frequently asked questions
How do I stop closing trades out of fear?
Lower your risk per trade until a loss no longer affects you emotionally, and decide before entering where you will get out either way.