Market/Trading psych - Some general guidelines

Thanks for adding this category @peter

Trading psychology ultimately impacts your outcomes. You can have a great trading strategy or HODL investment strategy that has been thoroughly tested, works and even automated, but you as a person can still interfere and jeopardize your results. I have seen it many times and its usually what separates a successful trader (and investor!) from the unsuccessful. In my opinion this is one of the most important aspects of trading from my experience and something that is regularly overlooked. Everyone focuses on the how to trade and then cannot follow their own methodology over the long term.

Some simple ways to manage yourself are

  1. Manage your risk (do not trade bread money, ever).
  2. Do not trade large size that causes you to start worrying about every tick up and down in the market. If that is how you feel, you are in too big. Reducing size is a fantastic tool for reducing emotions.
  3. Have rules and stick to them. Write them down. You must have a plan. No plan, no trade! Its that simple. Where is my exit, where is my stop loss? What happens if i dont reach either and X days pass - Are you still holding ? Hypothesize all the possible outcomes you can think of and write down how you will deal with it, before you put the trade on! Not after, because your biases kick in once the trade has been placed. It’s just how we are wired (see chimp paradox book below)
  4. Be mindful of your biases. I.e confirmation bias. This is why we have rules. Watch this video on different biases. The human mind can play tricks on you -
  5. When in doubt and questioning yourself (usually on big red days like today) - Ask yourself, am i sticking to my plan? Am i following my rules? If nothing has changed, then why are you worrying?
  6. Accepting the risk 100% before you place the trade. You should know that when i place the trade i will likely make X and just as likely lose Y. Accepting both outcomes 100% prior to entering the trade will serve you well in managing yourself and your expectations. No one can predict the market outcomes. Absolutely no one. Period. All you can do is trade the probabilities, and making sure you accept the risk you take, before entering the trade.

I wont continue to elaborate, however, there is some fantastic resources and tools i will mention below that are worth exploring if you are interested in learning more about yourself and managing your expectations.

Some other practices and tools that have really helped me over the years to better effectively manage myself if anyone is interested in exploring further are:

  1. Stoicism philosophy - Have a read about the ancient stoic principles and how they implemented particular thought strategies to deal with the every day struggles of life. There is gems in this philosophy of thought and a lot of these principles i try to practice regularly
  2. Meditation - I have found practicing mindfulness and becoming present/aware of your emotions. Meditation is a fantastic tool that provides benefits beyond just mindfulness. Academic studies suggest health benefits among other advantages of regular practice. This is not a spiritual exercise, but just regular ‘meta thought’ practice. Try the ‘head space’ app on the iphone app store. Free and a great intro to guided meditation.
  3. Ketosis - This is a metabolic state you can put your body into by dietary adjustments that helps maintain and great sense of clarity, sharp and focused mind. I find it helps me stay mentally stable and makes me feel fantastic. Google it to find out more.

Some interesting reads that i have found valuable

  1. The Chimp Paradox -
  2. Guide to the good life - Ancient art of stoic joy -
  3. Daily trading coach -
  4. Trading in the zone -
  5. Feel Rich - Documentary on Netflix that goes into mind body spirit and how they are all interconnected. Your mind really does have a massive impact on your reality.

If you have any questions, feel free to ask and ill share what i know. If i have missed anything which is very likely, please comment below! Have any other practices or approaches to better managing yourself? Lets hear about them!


Thanks so much for this! I think this is great start to this sub category! Lots of great links!

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Fantastic post. Thanks very much for this.


I am learning so much , thanks @smegey


Your a gentleman @Entropy.


Always review the year, monthly charts in addition to weekly or daily. It is too easy to lose perspective if you are only looking at weekly or daily for your in/out positions. Whale traders and those in the Financial Industry are counting on you losing perspective on where the current price is relative to the month, year if you are Day Trading.


Agree - Large context matters when OTF (other time frames) are active

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