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The Psychology of Trading - The most important element

Updated: Jul 18, 2022

The importance of controlling emotions when trading

Trading can be one of the most challenging careers out there. It is vital that you work on your psychology of trading. The psychology of trading is complex and can take time to master. Often, it is overlooked. It can cause stress, anxiety, sleepless nights and even affect other areas such as; relationships and health.

It important to have a good strategy, plan and risk management, but the most important part of trading is the right trading mindset and the psychology of trading.

“Trade what you see, not what you feel”

Common emotions for traders:


Many traders feel frustrated at some point. Whether this is frustration with themselves, the markets, or their results. Frustration is one of the causes of trading mistakes. It can result in limiting confidence and self-belief as well as a feeling of despair. When traders miss trades or lose money, they can feel frustrated. This is another emotion that can lead to irrational and negative decision making.


Greed can overpower the mind, traders tend to over trade and revenge trade. They chase losses, sometimes taking out their frustration with themselves and the markets. This is a self-destructive behaviour and is extremely important to work on.


Fear is an emotion that can lead to making irrational decisions. The fear of losing money, the fear of missing out (FOMO) or the fear of failing are common for traders.

This can elevate itself indifferent ways. For instance, when a trade goes against us, the fear of losing money can cause fear which leads to making the wrong decisions. Some traders freeze over executing a trade, whilst overs revenge trade.

Techniques to help

Breathwork and journaling aexcellent techniques. A few minutes a day to focus on your breath can help to ground you, calm your emotions, and assist you in remaining focused. Journaling is also a great way to release stress, and stay aligned with your goals and trading plan.


Once a trader has an effective strategy and trading plan, wise risk management and most important, has mastered their trading mindset and psychology of trading, then this is a combination for long-term success.

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