TRADING PSYCHOLOGY: How to become a good stock trader

Every stock trader has his trading psychology, and I am going to be discussing some scenarios to enable you to analyze your own trading psychology.

Do you trade in a happy or a sad mood?

It's advisable not to trade when you are too happy or too sad. You've got to learn to be focused before placing a stock trade. Also, learn to focus on the positive. Don't let the trading failure you had in the affect alter your mood when placing a trade in the future.

Do you Ignore profits?

If you do ignore profits when trading, trust that you are on the right path. Do not get too nervous when winning trades and cashing out. Concentrate on the trade while using your best trading skills. Don't get too comfortable making too much money, rather, trading properly will make the money run after you.

Do you Overtrade?

Research has shown that overtrading as an inexperienced day trader is a license to performing poorly when placing a trade. It is better to start trading at longer holding periods in order to build your experience before moving to daily trading.

Do you follow the trading system?

As a trader experienced with various trading skills, there is a guarantee that you would be making more money following a trading system. Knowing when a particular trading is likely to fail and ignoring it, gives you an edge to make more profit. In essence, know when to obey and ignore your trading signals.

Do you set price targets?

As an experienced trader, you would know when a price is about to change or trend reversing. So, depending on your trading platform, use a measuring rule to calculate breakouts from a chart pattern. Selling or buying your stocks at or close to targeted prices could earn you cool cash.

Do you trade with the trend?

 If the market or industry to which a particular stock belongs is moving up, always trade a stock whose chart pattern has an upward breakout. Avoid countertrend trading; that is, the market or industry is trending down and your stock is trending up. Avoid countertrend trading to maximize profit.

Do you check previous prices of stocks?

Checking how stock prices performed in the past can give you a clear indication of how such stocks will perform in the future. However, try not to get to yourself worked up studying previous prices because the stock may change and never repeat such trends.