The Secret to Trading is Hidden Inside the Psychology of the Trader

Ted Capwell

Many beginners, in an effort to work out the secret to successful trading, search for high-return strategies, completely forgetting that much of their success is dependent on their psychological perception of the trading process. In this article, we will go into detail as to why the secret to trading is actually the psychology of the trader itself, and also give an overview of the main psychological aspects connected with profitable trading.

So, knowledge and skills in trading are, undoubtedly, the base, without which trading profitably a priori wouldn’t be possible. Which is why, first off, we must do the person themself, who is preparing to earn with the aid of this financial tool. It is the first course of instruction. In this case, a trader’s relationship to financial trading plays as much of a role as their ability to earn. It is no secret that the basic principle of working with futures contracts, even to the most informed person, is that it often leads many to quickly view it more as a kind of gambling, than as a serious tool for earning a profit online. As a result, this attitude quickly leads to the loss of the entire deposit and disappointment, therefore, if you see trading simply as entertainment, you might as well spend your money on something more worthwhile.


The Secret to Trading is Hidden Inside the Psychology of the Trader


However, a base of knowledge and taking trading seriously alone won’t guarantee that after that you can just click on profitable trades as if it were nothing, and money will just flow. The reality of it is that even when you place all your trades right, it can still result in a loss. This is something that you must accept and make peace with because forecasting the financial market correct 100% of the time isn’t realistic. Every day an army of traders log onto financial platforms, however, few ever reach the level of a professional. One drop of the ball and the abandon their “venture” to become a trader only after the first series of losing trades. Others slowly lose their capital, because they can’t cope with their own emotions.

In essence, you can’t avoid losses in trading, however, your final trading result will hinge on whether you have the psychological ability to cope with losing money, meaning that you have the right trading perspective and can find the strength within yourself to continue on. The secret to the success of traders, whose daily earnings amount to several thousand dollars, is not only that they take steps to improve their skills over time, but also their attitude to trading. Whether it be profit or loss, they remain calm, not obsessing over the losses or becoming overly egotistical following profitable trades. They are certain in their actions. For them, it is not a game, but real, serious work. This is why, when talking about the secret to trading that, first and foremost, we are talking about psychological perception.

What do you need to do to perceive trading correctly psychologically? You need to learn to master your emotions! After all, it is emotions that compel us to make this or that decision and act in various ways. Learn to be in control of yourself, and the effects will completely change how you see trading.


Emotional Disposition and Proper Perception in Trading


Losing money is stressful for any trader. It is well known that in stressful situations our brains work completely differently. When our money is threatened, we start to worry and make many impulsive and gut decisions. As a simple example, the difference between trading on a demo account versus trading on a live one. When trading on a practice account, we understand that there is no real threat to our money, so we calmly analyze the market and close trades thoughtfully, continuing to trade even if several of the trades result in a loss. It is completely different trading on a live account. We worry, and in trying to take advantage of the market, we often act in illogical ways, even trying to recoup funds after a series of losing trades. This is specifically why trading on a demo account is always more profitable than on a live account. Many blame the platform, implying that they have somehow “manipulated” the demo account to be profitable, but in reality, good platforms open their training accounts on the real terminal, therefore it simply shows that your own trading process differs when you are risking real money, as opposed to virtual funds.

How can you manage your emotions? For starters, accept that your trades can end in losses, even if you enter under the perfect conditions. It is also worth understanding that losses aren’t always the result of any action on your own part. At the end of the day, situations on the financial market are dependent on many, sometimes unknown, factors that are impossible to forecast. Once you understand and make peace with the fact that trading without any losses is impossible, you must aim to rid yourself of characteristics such as competitiveness, greed, anxiety, uncertainty and other negative emotions. The following will help you to do this:



Just as with anything else connected to financial risk, discipline is important in trading. The best way to embody it is to draw up a trading plan and strictly adhere to it, and at the same time following all the rules of the trading strategy and money management. As an example, say you need to disperse your deposit, and you are prepared to employ scalping and other risky methods, such as averaging and Martingale to do so. In this plan, first and foremost, you need to set aside specific funds for use in a more stable trading regime. Emotions such as greed can come up, which should be put aside. Of course, everyone wants to earn a lot of money fast, but that desire compels you to increase the number of trades and regularly trade aggressively, rather than dispersing the deposit to a specific sum, then slowly and surely increasing its size. Therefore, as much as you may want to put the trading plan aside and take your chances on more risky trades, pull yourself together and prevent yourself from doing it. It is the only way you can achieve consistent goals with minimal loss.


Patience is crucial in trading, without it, you literally couldn’t do a thing. A common mistake traders often make, is that they simply can’t wait until the most opportune moment to close a trade, or they enter one prematurely. Of course, sometimes their intuition can work to their benefit, however, often this kind of rush ends with a loss of funds. The issue is that every strategy has its own set of necessary conditions for entering the market, and if all of the specified conditions of the system haven’t come to fruition, then you cannot place the trade.

Also, to be patient is to understand that you can’t earn enough for the apartment or car of your dreams in a week or even a month. More likely than not, you have already seen many films about successful traders, who in a short period, practically overnight, earn millions. However, these films are far from reality. In truth, most traders cannot achieve the lavish lifestyle depicted in the films even within a year. Why is it like that? Returning to the beginning of the article, to the part on how some approach trading trivially and aim to profit quickly and effortlessly. It is worth reiterating once more, financial trading with the aid of futures contracts is not gambling, even if from the outside its algorithm seems very similar to that of betting. When you open a trading terminal, you see the rate chart of a real exchange asset, the cost of which can be forecasted with various indicators. In other words, it is a serious matter and your luck has nothing to do with it.


Emotional Disposition and Proper Perception in Trading
The terminal Binomo is used as an example



Tenacity is also on the path to success. If you are tenacious and decisive, you won’t flinch after your first initial loss. On the contrary, it will serve as motivation to work on yourself, analyze and improve upon your mistakes. Your worst enemy, in this case, is self-doubt, anxiety, and despair. Everything begins with self-doubt. You start to think that this might not be for you, that you aren’t smart enough, that you’ll never be fortunate enough to live in a lavish penthouse, drive an expensive car or jet off to relax at exotic resorts. If everyone thought that way, then there wouldn’t be one successful businessman, trader or investor. There would just be a uniform grey mass of people with various complexes.

And anxiety arises in the wake of self-doubt. Anxiety about losing money, fear of not meeting your own expectations, fear that your friends’ are right that you are misguided and many other various stresses that cloud your judgment. In all actuality, anxiety can ruin any trading plan, but more importantly, it will prevent you from closing trades at the most suitable places and you will miss innumerable opportunities for profit. And if anxiety doesn’t only compel traders to preserve their capital, more often than not, they lose connection with reality and place trades in circumstances where the market clearly lacks any signal at all.

As a result, their deposit slowly shrinks, leading them to despair. Which is arguably the worst state to be in, because when people are in despair, they are absolutely unpredictable. Already having closed trades in desperation profitably, in terms of the strategy, many, for example, start to close trades relying only on their own luck. More likely than not, you already know how that ends. After losing the entire trading account balance, few manage to gather up the strength and courage to learn from their mistakes and start trading again.

Therefore, in order to achieve success, you must foster tenacity and try to fight your own demons with all your strength.

Desire to learn from your mistakes

Smart people learn from their mistakes, however, financial trading is a bit of an exception. In this case, you only need to learn from your “errors”. You cannot learn from other traders’ errors, if only because there are no two identical market situations. You can observe the trading practices of as many successful traders as you’d like, however, you cannot place the same trade twice in the same place, besides, it is one thing to just observe, and another completely to risk your own deposit.

What should you do? After closing a losing trade, you need to analyze where you went wrong. It could be a simple mistake in the expiration period, where all the necessary conditions for entry were fulfilled, but you set the contact expiration period either too short or too long. This problem can be easily solved by strolling through historical market data, so you can gauge the average duration of a new price impulse, on which you need to close your trade. The problem also could possibly be that you didn’t sufficiently follow the specific requirements of the strategy. In any case, it isn’t worth repeating the same mistake over and over, try to vindicate yourself to the financial market or you yourself. You simply need to make peace with the fact that you make mistakes, figure out why and move forward, trying to avoid repeating the same error that already lost you money.


The opinion of others will also influence the psychology of your trading, therefore, you should remain completely independent from the commentary of others. The financial literacy of the majority of people leave much to be desired, however, many have become accustomed to thinking that the only way possible to earn a profit is to follow the crowd. Therefore, you will hear ad nauseum that your positions are stupid, and they are misguided.

How should you respond? Here, it is most important to continue on calmly and not allow yourself to be defeated, mindlessly accepting that you have chosen the wrong path. Of course, it will be difficult, and you will surely doubt your abilities countless times, however, the time will come when you will embody all the aforementioned positive qualities. Your anxiety and self-doubt will evaporate, replaced by discipline and new goals, and the dream of financial independence will become completely attainable.


“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”