Trading in the Zone
The Psychology of Trading
Most traders begin their career in trading by logging on to Google to find the latest and greatest technical indicators and trading setups. They believe that if they can just find the “perfect” trading system that they will well on their way to the Holy Grail. Experienced traders know that the true secret to the Legend of the Holy Grail is not found in an indicator or trading setup. Instead, it is an individual trader’s ability to manage the internal battle between wins and losses. In other words, in order to be a successful trader, you must be able to master the Psychology of Trading.
In the book Trading in the Zoneby Marc Douglas, it states the key to becoming a successful trader is developing a trader’s mindset. Reading this, you may think that acquiring this Trader’s Mindset would be easy. For some, it may be; however, for most it is the exact reason that they have never been able to trade consistently and most importantly profitably. Being able to stay focused and disciplined to your backtested trading plan clearly separates those who make money on a day to day basis and those traders who ride the stressful roller coaster of up and downs (unfortunatley more downs than ups).
Profitable traders are able to think differently about the market. First, they are able to control their fears about trading. Notice I did not say eliminate. We all face those fears each and every day. The different is that successful traders are able to maintain focus and control of their emotions to help prevent self-sabotage. In addition, they recognize that the stock market does NOT have a vendetta against them. It is not the trader vs. the market. Instead it is the trader’s ability to receive the opportunity flow the market provides each day. Sometimes you win. Sometimes you lose. Either way, the market provides opportunities. It is our jobs as traders to apply the appropriate strategy to the current market condition.
Recommend Books on the Psychology of Trading
- Trading in the Zone by Marc Douglas
- Trade Your Way to Financial Freedom by Dr. Van Tharp
- High Probability Trading by Marcel Link
- The Logical Trader by Mark Fisher
- Trading for a Living by Alexander Elder