They say trading is 90 percent psychology. I strongly disagree with this statement. The numbers I’ve seen show that the share of “retail” trading does not exceed 10 percent. I don’t know how accurate these numbers are, but it means that the rest of the market participants are professionals. Consequently, their focus is not on emotions but on achieving set goals.
The first thing we must acquire is technical skills. That is, mastering the tools that will allow us to implement our plans.
This means you should be able to open and close a position, place/cancel/modify an order, naturally understand how orders work, set up everything you need on the screen for work, and, finally, be technically ready to create your own rules.
When creating rules, you need to build your ideology/strategy or call it what you will; I call it the philosophy of trading. The cornerstone here is whether market movements are orderly or chaotic.
They are chaotic but possess some inertia. Therefore, my market philosophy is based on the principle of moving from small movements to large ones. If you can determine the direction and the minimum distance, then luck takes over. Accordingly, you need to think through your course of action to catch this luck. Here we return to the technical aspect again. We need to create rules for action in chaos.
ANY misunderstanding of the process will cause panic, and everything will go very badly. Your nerves will fail. But this problem is based on a misunderstanding of the process, and it is treated not by visiting a psychiatrist but by studying the market to create your trading strategy.
Let me give you an example. The Elliott Wave Theory. How we define the waves, where each one starts, is the technical part. But how we will trade is the philosophy. Some trade in pursuit of the third wave, while others are satisfied with the correction after the fifth wave. This is philosophy, and it will have its unique features.
And only after that, when you have studied the tools for working in the market, the behavior of the necessary financial instruments, and created a strategy based on how you see the market (that very philosophy), you will encounter psychology. Moreover, psychology will be at the level of your stress resistance.
What will you prefer: waiting longer or trying more often and possibly getting more losses? What losses and profits are you ready to accept in absolute and relative terms? What goals do you set for yourself? Of course, these are very important questions, and without answering them, you cannot become a professional. But I emphasize once again, to get to these questions, you need to put in a lot of work, resulting in studying the technical aspects, creating a strategy, and refining the technical aspects for your strategy.
Best regards.
