When I refer to psychology, I am not talking about market behavior or sentiment. I mean to say that it is the mental state of the trader that is in charge at that moment. The market will do what the market will do, there’s no stopping it. Independent countries can pump trillions of dollars into it, and after moving a measly few points, it reverts back and wipes out that infusion. After you have your well thought out trading plan ready (you did plan ahead, right?), you must not only execute it, but also stick to it.
I believe that once you have developed a positive trading habit, when you find yourself placing minuscule trades without effort, and not worrying about the outcome, because you are confident and not self-conscious, then you are on your way. Remember what I said about trading pennies? Any amount of money will cause your brain to wrestle with the possibility of loss, and then looks to minimize or avoid that loss. You know that going into that trade you may not succeed. Your brain doesn’t understand that, so you must train it.
Once I understood that psychology is ultimately more important than anything when trading, things just started to work. I became more confident, creative, and able to adapt to the changing charts (I don’t care what the underlying is). A separate psychological barrier is the size of the trades, but that will be discussed later. There are some people who are naturals at this, and they don’t have the mental blocks that others start with. They usually focus on other things that may need work. That’s just how us humans are made. It doesn’t mean that we can’t change. So, what are you waiting for? You can change your thought patterns with practice; go do it!
