Trading Psychology: Where success comes from

Published: 30 November 2020 by Andrew

Why is Psychology so important in Online Trading? How does Trading Psychology influence the choice of the trader? Many beginners think that in order to make the most of trading they have to strive to learn complex techniques and strategies and do not realize that there are other factors that make a difference.

The trader’s psychology can determine the difference between making and losing money. Probably only the choice of the trading platform has a greater impact on the final result.

To understand better, let’s start immediately with a concrete example: today with the eToro platform it is possible to copy, in a completely automatic way, what the best traders in the world do.

In practice, you immediately get their results and you can even learn to trade by observing what they do live. Just click here and sign up and technically you can get the same results as a professional right away.

In short, learning strategies and techniques is not much use in this case (the best are copied) but the mentality must be the right one.

In this guide we explain in detail what are the fundamental elements of a winning psychology. Before even understanding the stock market, you need to understand yourself

Trading Psychology: think big

The biggest problem with many novice traders is that they don’t think big. Yet this is the key point of any successful career (and not just in online trading).

The story of the great Warren Buffett should teach us a lot: he started with a capital of a few dollars and without any kind of specific knowledge and managed to become one of the 3 richest men in the world.

And this taking into account that he has literally donated tens of billions of dollars to the charitable causes he cares about, otherwise he would probably be the richest man in the world.

Thinking big is essential, for two reasons. First of all, because only big dreams can push us to act concretely, to work hard (when needed) and to believe fully, even when it seems that things are going wrong.

The other reason is more prosaic, but no less important: goals are not always achieved in life, even if one puts effort and good will into it.

Well, if I was aiming for little and only reach half of my goal, I completely failed. If, on the other hand, I was aiming for a lot and I reach half of my goal, I still got enough.

In short, it is not said that you will be able to become rich like Warren Buffett, but if you believe in it and commit yourself you will probably be able to live on trading and realize many of your dreams.

Trading Psychology: remove limiting beliefs

The great Henry Ford used to say: Whether you are convinced you can do it, or whether you are convinced otherwise, you are right. In fact, Ford was convinced that he could succeed by building and selling cars and by truly starting from scratch he was able to build an empire that exists and still thrives today.

Well, many traders are convinced that they can’t do it and therefore can’t do it. Their problem is their limiting beliefs.

Online Trading is difficult

For example, they think Online Trading is extremely complicated and therefore they don’t even try to commit. Instead, as we have already seen, it is even possible to automatically copy the best traders in the world thanks to eToro.

And then, those who want to learn have exceptional free courses available, such as ForexTB. It is a 100% free course, easy to study even for beginners because it does not use technical language and above all it is completely practice-oriented, so it does not waste time with theory but explains exactly how to make money with online trading.

You can download the ForexTB course by clicking here

Among other things, those who sign up for free at ForexTB have the opportunity to be followed on the phone by a real trading expert who really helps them step by step. And he can also use an unlimited free demo account for risk-free testing.

You can sign up for free on ForexTB by clicking here

In short, even if online trading is not a game, it is not even difficult as many beginners think because today there are tools to learn and do well right away.

To Trade Online you need a lot of money

If the belief that trading is difficult is wrong this is truly absurd. Some novice traders would like to trade but wait because they think they don’t have enough money.

Or they start but immediately resign themselves to not getting great results because they only have small sums available.

It is a sensational error of mentality: in fact, today there are trading platforms that allow you to start with a minimum capital and to make it grow you just need to take advantage of the “magic” of compound interest.

The table below shows, among other things, the minimum deposit required by each of the best trading platforms:

Platform: etoro
Min. Deposit: 50€
License: Cysec
  • Social Trading (Copy the best)
  • Simple and intuitive
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: xtb
    Min. Deposit: 100€
    License: Cysec
  • Free demo
  • Free Course
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: iqoption
    Min. Deposit: 50€
    License: Cysec
  • Free demo without limitations
  • Minimum deposit low
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: ubrokers
    Min. Deposit: 250€
    License: Cysec
  • Free Training
  • Zero Commissions
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: trade
    Min. Deposit: 100€
    License: Cysec
  • Free demo
  • Free course trading
  • ➥ Start
    1star 1star 1star 1star 1star
    72.30% of retail CFD accounts lose money
    Platform: forextb
    Min. Deposit: 250€
    License: Cysec
  • Free trading course
  • Free trading signals
  • ➥ Start
    1star 1star 1star 1star 1star

    As you can see, 10 euros can be enough to start! The others require between 100 and 250 euros, other than large capital …

    Online Trading is risky

    There is no doubt that there are risks to be faced when trading online. But there are beginners who are literally paralyzed by fear. We can distinguish trading risks into two categories: those that can be eliminated and those that can be controlled.

    Among the risks that can be eliminated we can include that of suffering scams. How do you avoid scams? Simply by operating only with licensed and regulated platforms (such as the ones we recommend in our list above).

    The risks that can be controlled are those related to the market. How are these risks controlled? The best trading platforms provide powerful tools for risk control such as Stop Losses. A stop loss specifies what is the maximum loss a trader is willing to suffer on a single trade.

    Read more: Trading Risks

    Trading Psychology: Dynamic Mindset

    One of the key points to be successful with online trading is having a dynamic mindset. What does this actually mean? And how does it differ from a static mindset?

    Those with a dynamic mindset know well that they are not perfect (after all, they are) but they also know that results can be achieved with commitment and hard work (in fact, work can sometimes only be intelligent, not hard).

    On the other hand, those with a static mindset think that results are achieved only and only on the basis of talent or luck. These types of people can also have great results, but only if they are geniuses.

    Those who work with a dynamic mindset give themselves the opportunity to always improve, learning and accumulating experience.

    The difference between static and dynamic mindset can also be seen in the moment of failure: those with a static mindset see every small loss as a failure and immediately think that they are a loser, that they are not cut out for online trading.

    Those with a dynamic mindset, on the other hand, try to learn even in the moment of failure and roll up their sleeves to do better and better.

    The psychology of winning online trading is based precisely on a dynamic mindset. And who doesn’t have this kind of mindset? No problem: changing is much easier than you think.

    Easy Money? No thanks

    When analyzing the online trading psychology of those who lose money, it often turns out that they thought that online trading was a kind of game that could generate easy money.

    Now it is true that trading is not at all difficult as someone else thinks, but it is equally true that it is not about easy money. The promise of easy money is typical of scammers, for example those who offer a system to make money with Amazon for a small investment (one of the most widespread scams on the internet).

    It must be said that, unfortunately, even apparently legal platforms like Robinhood have somehow conveyed the message that online trading is a kind of bet that easily generates profits. It is not so.

    Trading success takes commitment and time.

    eToro

    Someone might say: but, eToro? With eToro it is possible to automatically copy the best traders so it may seem like an operation that does not require any kind of commitment.

    But that’s not the case at all. Even with eToro it takes time and effort to accurately select the traders that are worth copying and you must also follow a minimum of strategy.

    For example: it is not enough to copy only the best trader, you need to diversify to minimize risks. And we also need to diversify the markets preferred by these traders and their risk appetite: there are professionals who prefer to risk little, making a lot of trades with small profits, and others who prefer to take more risks and make few trades with high profits.

    It is not even enough to make the right choice and wait to collect the profits: you have to monitor day after day the results obtained by the copied traders to make the appropriate updates.

    In short, it is not complicated (it would be an exaggeration to call it hard work) but it takes commitment.

    You can sign up for free on eToro by clicking here

    Online Trading Psychology: the control of emotions

    A large part of the psychology of online trading is the control of emotions. Incidentally, we observe that the control of emotions is so important that one of the advantages of algorithmic trading (for example through MQL scripts) lies precisely in the fact that algorithms do not feel emotions.

    Those who trade online usually want to make money, so they are driven at least in part by greed.

    We cannot judge greed as a negative feeling but we must always be vigilant so that it does not take our hand and lead us into wrong operations.

    Likewise, any trader’s worst enemy is fear. Indeed, many would-be traders don’t even start out with the insane fear of losing money.

    This is a deeply irrational emotion, also because the best trading platforms require very small capital (250 euros is always more than enough).

    Fear, however, must always be dominated and can even make a positive contribution (if dominated): for example, if it pushes to always set stop losses on each operation (recommended practice) or helps to avoid reckless operations.

    Remember: dominating emotions is much more important than knowing strategies and indicators. You can make money even if you don’t know the Pivot Points or the ADX but you certainly don’t earn if you don’t know how to curb fear and greed.

    The basis of online trading psychology is to dominate fear, always. Unfortunately, it is not always easy and there are times when large masses of investors panic: it is the famous panic selling. Only auto trading robots have no emotions …

    online trading psychology

    Online Trading Psychology Books

    What is the Best Trading Book to learn winning psychology? At the top of every ranking on the best trading books there is always the ForexTB ebook which is free, very practice-oriented and very complete: it explains in detail (but in simple words) the technical aspects of trading but also those psychological.

    You can download the ForexTB book for free by clicking here

    Another truly essential book for those who want to quickly acquire a mindset for success (not just in trading) is Think and Grow Rich, by Napoleon Hill. It is a book written many decades ago but is still very current (and can be found on Amazon for a few euros).

    Conclusions

    Beginner traders are led to think that the success of trading depends above all on the use of complex strategies. It’s not true. One of the most important factors is the psychological one: the trader’s psychology can make the difference between losing and earning money.

    Perhaps only the choice of an optimal trading platform is more important than the psychological aspect.

    In this guide we have analyzed in detail what are the fundamental elements of a winning online trading psychology.

    Why is it important to think big?

    Because only by thinking big you can achieve great results. Furthermore, even if the result is only partially achieved, if the goal was large enough, the result will still be satisfactory.

    Who are the beginner traders who fail?

    Those who are stopped by limiting beliefs. It doesn’t take a lot of money to start trading and it is easy to learn.

    What are the most important factors in online trading?

    In the first place, the choice of an optimal trading platform. In second place, good trading psychology.

    Is greed wrong?

    No, it can be a push to do better but it still needs to be mastered to avoid missteps.

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