Trading is often described as 10% strategy and 90% psychology. While technical analysis and risk management are crucial, they are useless if you cannot control your emotions when real money is on the line. In volatile markets, this becomes even more critical.
The Fear of Missing Out (FOMO)
One of the most common pitfalls for traders is FOMO. When you see a candle shooting up, the instinct is to jump in. Strategies to combat this include having a strict trading plan and only executing trades that meet your pre-defined criteria.
Revenge Trading
After a loss, the urge to "make it back" immediately can lead to reckless decisions. This is known as revenge trading. The best way to handle a loss is to step away from the terminal, take a walk, and review your trade later with a clear mind.
"The market is a device for transferring money from the impatient to the patient." - Warren Buffett
Conclusion
Mastering your psychology takes time and practice. By recognizing your emotional triggers and implementing rules to mitigate them, you can significantly improve your trading performance.