Psychology of TradingPsychology of TradingWhat makes a great trader?What makes a great trader?

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Psychology of Trading

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Psychology of Trading

• Commitment to excellence• Mastery of emotions• Probabilistic thinking• Understanding and ability to control one’s own thought processes

• Staying in the moment• Executing a trading plan without fail

What is Psychology?

• The science of the mind• Studied by observing human behavior

What is “Psychology of Trading?”

Common denominator of all successful traders is the understanding and mastery of how mental and emotional states affect the ability to trade.

Psychology of Trading

What would you do if you knew you could not fail?

Trading as a Performance Art

• Preparation• Execution• Reflection

Internal Motivation

Following Your Bliss

The Pursuit of Excellence

Common Traits of Successful Traders

• Discipline

• Commitment and Goal Setting

• Strict loss cutting • Being right vs. making money• Passion• Non-attachment

Discipline

• Training expected to produce a specific character or pattern of behavior, especially training that produces moral or mental improvement.

• Controlled behavior resulting from disciplinary training; self-control.

Preparing to be WRONG!

Thinking Probabilities vs. Patterns

• Eliminating biases• Focusing on what is• Recognizing mental and/or emotional states is the first step to controlling them

Zen

• Staying in the present moment• The Beginner’s Mind

Tools to Build Mental Discipline

• Journaling• Cultivate awareness of present situation• Rid mind of preconceived ideas• Taking the next right action• Learning from mistakes instead of repeating them

Obstacles to Success

• Hope• Fear• Greed• Perfectionism

Creating a Belief System

• Transforming Intellectual Understanding• Eliminating doubt• Trusting your trading plan

Irrational Exuberance

Artists, Athletes, Actors and….

Traders?

The Psychology of Trading

• The importance of being passionate• Taking delight in the process• Having fun in the moment (even in the heat of battle)

Trading as a Practice

• Thinking long-term• Continuous improvement• Understanding yourself

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