Trading mindset is super crucial, in my opinion. Knowing when to jump into the market and when to exit, plus figuring out the right time to average in, all falls under trading psychology.
Everything is linked in trading. If you manage your risks well and have solid money management, using low leverage really helps you maintain a good trading mindset since you won't be driven by emotions.
This part of trading teaches you that relying solely on day trading isn't great for serious traders. You can snag some profits and still hold your positions until they really pay off.
It also highlights how sometimes, using stop losses can feel pointless.
What do you think? Do you consider your trading mindset to be strong? I’m using the term strong here to keep it simple. If you're just scalping or day trading with stop losses, I can’t help but think your trading mindset isn’t the best. A pro trader can switch between scalping, day trading, and swing trading whenever the opportunity arises, but they do it with amounts that suit each approach.
Stop-loss is designed to make trading gambling earning the exchange house edge that keeps trader losing to the house.
Traders must have accurate trading psychology, where losing becomes impossible, this can only come through proper position management in terms of balanced strategy that keeps you in the market no matter the condition of your assets.
Avoiding liquidations/stop lose is key to trading success once as a trader you develop that habits of patience to wait for your profits to arrive.
I totally agree with you here. Because stop loss can also be helpful when you are looking for a risk management strategy. But along with this, I think that if one has little or no knowledge about the trading space, then the chances are higher that one can probably place the wrong stop loss point at the wrong position. This can also lead that person to the loss that he is trying to prevent. But somehow it can be helpful for washing the whole portfolio, haha. This is why I think one should be more concerning on this matter, and to overcome this, one should do research on FA (Fundamental analysis) and TA (Technical analysis). What do you think about this?
Other than this, I am really a kind of person who stays more away from the trading space, and in my whole career in crypto, I took some trades, and that only were in spot section, and I really hate the futures section due to many factors and some personal reasons. Do you trade, or in which section do you trade the most, future or spot?
No doubt that hodling trade for long is more profitable and that is called position trading. However, the challenge with this kind of trading is that you must know when to exit. It is painful after hodling very good profit then you later lose it because you couldn't understand when to leave. Yes I agree with you on this and that is professional way of trading, if you have the way to stabilize your emotion. It is difficult to see huge profit and not take the profit but allow it to continue accumulating.
However, I think SL is protective. When you enter a wrong and unprofitable market, it helps you to retain part of your capital.
You can be a trader that has a good strategy and all but at the end of the day you might still end up incurring losses that are more significant than the profits you make from trading in the long run. Trading psychology is about 60 percent of trading, this tells you the importance of it. Trading psychology is a course on its own that a lot of traders need to master before they can start thinking about making profits. This is what puts you in control of your emotions and helps you maintain a healthy balance so you don't become indisciplined.
There is nothing that can convince me, the best is to just hodl and have a peace of mind. But if a trader is using small amount of money to trade, it is good but it has to be in a way that the trader will have at least 70% of his money that he will not use to trade but just hodl it.
So you are using stop loss and that is making you not to be losing in trading? Please be real and not just post about what other people are saying. If banks are trading, I do not think they will use stop loss.
Trading psychology depends on the psychology of the person in question. The nature of that person has a huge role in defining them as a trader. They can be bad or good, it depends on them alone. The market also has a huge impact, but we are not counting that now.
I do have a trading psychology which I built after trading for many years, and I built that psychology after losing a lot. That is: book your profit, do not regret what you could have made or what you lost. Always be happy, sleep early, and read every single news without biased opinions. First read the news, get your opinion straight, then read others' opinions.
Follow your gut sometimes. Like when your gut is saying stop trading now or you will lose, you must listen to yourself in those cases. Although psychology is a big topic, I can't cover it all in one post, but we have a lot going on in trading, and we have to deal with that.
I would agree that trading psychology holds a vital role for every potential trader.
It helps a trader creates more rational and data-driven decisions instead of becoming emotional in every market challenges with trading. It encourages the trader to become more disciplined and enforces risk management through stop-losses and position sizing rules.
And most importantly, having a good trading psychology, a trader should maintain long-term profitability by getting rid of fear and greed to avoid leveraging or panic selling every time the market behaves unfavorably.
Personally, good trading psychology is still working in progress, but with consistent trading experience, I believe I can make it happen in due time.
Psychological pitfalls of market cycle.
Psychology of market cycles.
One of the best weapons in trading: Stop loss order.
People are participating in the market must understand about the market cycle, psychological cycle, challenges, and understand risk of trading without using stop loss order or stop limit order. Then know how to use these orders to protect their capital well.
With their experience, they will know that trading is more risky than investment and holding for long term.
Thank you for saying the reality, some people will learn how to trade and try their best to be a good trader because they want to make money from it, when they miss the next bull run, they will be blaming themselves again.
There is nothing better than hodling, they can allocate like 5% to 10% or maybe lower of their money on trading if they are feeling like they have to trade and they should not be tempted to use more than that to trade.
Yes, that's true because catching every moment perfectly is nearly impossible due to the unpredictable behavior of the crypto market. Even if you have good knowledge of FA (Fundamental analysis) and TA (Technical analysis), there are still chances that you may lose your trade. That is why I personally stay away more from the trading space. I have never taken even a single future/scale/margin trade in my whole crypto space journey. But yes, I have taken some trades in the spot section as it is less risky compared to any other trading type.
Because in spot trading, there are two things that can be kept in mind: if you are losing a trade, then you can use a stop loss, and, in case you are confident and not using a stop loss, then you can hold that coin until you get back into the profit zone. But using a stop loss is a more recommended thing in my point of view. DYOR!
Stop-Loss is a life-saving function that can save us from financial ruin when things go south. I am curious why @OP narrates it as useless, though.
Trading is not only riskier than long-term holding but also very time-consuming, especially when one is engaged in day-trading. Even if one use trading bot, it is still mentally consuming because the time, focus, and thinking of a trader will always be on the item he is trading. Traders cannot deny that unless the order is fulfilled, their attention is always on the trading platform.
The opinion you have given about trading here is literally the timing of starting trading. If you use leverage at a time when the market is volatile and has gone through a period of decline, it will not be positive in most cases because the market may fall further.
In the initial stages of trading or investing, it is better to use small amounts of leverage and stay within a tolerable level. Do not trade with the entire amount of funds you have because the market is volatile and the price may fall further.
The mentality of holding positions to get enough profit can lead to a long-term strategy, which I think is positive because the goal of small profits in most cases increases regret and increases the amount of losses.
The most important thing in trading is opening a position at the right time and closing it at the right time irrespective of the type of trader that you are be it day trading or swing trading because professional traders run at loss too in the long run. Time management is also very important in trading because some traders thinks that trading all the time gives them the chance to make profit or recover their losses which is wrong because it will lead to more losses.
In my opinion, a professional trader sticks to the type of trader they choose to be, they don't jump from being a swing trader to a scalper and then a day trading, that's part of the psychological mastery. They don't deviate from doing just what has been working for them and what is easy. So, I don't agree with the part you said a pro trader can swing trade, day trade or scalp if they see the opportunity, or perhaps, the definition of "professional trader" is just subjective. Also, I believe that depending on the kind of trader you are will determine if setting a stop lose is important to you or not, personally, I believe that if you are a day trader or a scalper, setting a stop lose is part of your risk management measures because you should not take a trade without setting a limit of the lose you can accept in that trade and also the limit on profit that you are expecting.
Simple logic, you can't think and execute proper risk management if you have poor psychology. You will only see trading as another get-rich-quick scheme. You will rush into trading and trade without using stop-loss in times when you are already losing.
However, but with good trading psychology, you will do trading based on your trading plan and goals. You will adapt good risk management, and study how to time the market to optimize entries and exits. You will incur patience and market understanding every time you risk your hard-earned money into trading. Trading is known to be highly risky, that's why having good psychology is a must, along with good risk management.
Being a good trader or in this sense a professional trader to me is more of a byproduct of knowing the mechanics. The true test of knowledge is in application or rather perfect execution that gets the desired result.
It's good to perfect the knowledge and application to perfection, day trading, scalping, swing trading because it makes such a trader know how to improvise or manage or be swift when trading without much reliance on stop loss as mentioned.
Flexibility, risk management practices that includes capital or financial management will always make trader stay longer in the game and be more professional than the rest who are just posing.
This is one thing that differentiates one trader from another. Many traders need to know that they need toMaster their psychology in order to be profitable because trading strategy cant help alone . Because many do have same strategy when come to trading but what differentiate them is their psychology and mindset towards trading , and thats where risk management comes in too and same time preventing chasing losses .
All trading decisions and actions are what contributed to trading psychology. This is the reason why every trader should establish good psychology in order to increase the chances to trade in success and profits. Otherwise, if you are just trading in the market without positive views and long term plans and goals, trading will turn into gambling, and just like gamblers, traders consistently lose until they mess up their funds and develop anxiety and depression in the long run.
Trading psychology should not be seen just a part of trading, but it should be given the highest form of essentiality as a trader.
Nope, I do not have any single strategy that works best for me. I do not have enough time and I have not backtested for a long time, but now with all these years I do not feel the need to backtest and rehearse like a newbie. I am good at understanding the psychology of traders in a few coins and that's how I can trade them and make profit.
When we are day trading we do not care about how much profit we made. We just have to close as soon as possible, but in profit, and we also have to take the fee into account.
Psychology is different from strategy also, because it is related to how we think about the trades we are taking, like in loss or in profit. How we control our emotions. So yep I think my psychology and strategy are both fine so far and are improving.