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2024/06

How to develop a firm trading mindset in the investment arena?

Roman historian Livy once said, “Bad things affect people far more than good things.” What does this mean?

For example, you may feel indifferent if your account gains 1,000 yuan. However, if you lose 1,000 yuan, you may feel devastated. This emotional bias makes you fragile and fearful. As your account incurs more losses, you might exit the market because you can’t handle it.

To combat this emotion, you need to practice mentally diminishing the importance of money. This way, you won’t be triggered when a loss occurs and can maintain rational trading. This approach helps you reclaim personal freedom from external influences.

Common Trading Psychology Issues:

1Excessive Speculative Mindset: Investment is a process of wealth growth, but many people treat it as a shortcut to getting rich, turning investment into gambling.

2Abandoning Familiar Instruments: Blindly following trends and comparing oneself with others leads to failing to stick to trading principles.

3Frequently Changing Trading Plans: Constantly adjusting plans with every market fluctuation, resulting in a deteriorating mindset.

4Focusing Too Much on Profits and Losses: Neglecting the essence of trading by not respecting the market trends and failing to develop corresponding strategies. This often leads to hasty exits due to impatience or pressure, missing opportunities or failing to cut losses decisively.

5Failure to Follow the Trend: Some traders rigidly apply the logic of “be greedy when others are fearful” by looking to sell during a rise and buy during a fall. This often results in being unable to hold onto profits and getting stuck in a self-created mental vortex.

6Real-time Trading as a Psychological Test: The trading process should involve calm entry, patient waiting, rational analysis, and decisive action. However, many traders let anxiety, worry, greed, and fear distort their trading plans, wasting time and energy with poor outcomes.

Methods to Control Trading Mindset - Scientific Training (Varies by Individual)

An excellent trader’s confidence, calmness, objectivity, composure, resilience, and other positive psychological traits are developed over time. They result from years of planned training.

Psychological training is challenging because it confronts your inherent nature, persistent psychological flaws, and obstacles. There are no shortcuts besides persistent effort, continuously regulating your trading psychology, and improving through real-world practice.

Thus, you must recognize the importance of training and take decisive, unwavering action rather than remaining passive.

You need to be someone who can control your actions and consistently align them with your desired state. Continuous reflection and rational control over emotions are essential, limiting emotional fluctuations to maintain a clear mind and the ability always to analyze calmly.

Improvement in psychological control depends entirely on your willpower and determination. If you are determined and strong-willed, you will find a suitable psychological training method, enhance it through practice, and ultimately develop the capability to succeed in the market.

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