Why 95% of Traders Fail: Trading Psychology Secrets You Need

1. Introduction: Why You're Here

so you're probably reading this blog because you lost a lot of money day trading the forex markets crypto whatever so I’m here to help you with your trading psychology the mindset that you have to have to be a day trader and to be a successful day trader is very systematic so in this blog. I’m going to give you five rules that you must follow in order to be a good trader to improve your trader psychology and to relax when day trading

2. The Emotional Trading Trap

here's what you're probably doing you are getting into the markets you're watching price action and you're seeing movement and you get in on a trade with no other analysis besides the fact that the price is trending up like crazy we just had this huge spike I’m going to get in I’m going to get out as quick as possible you know just scalp a little bit make some money walk away you get into profit you don't take it because you think it's going to go even higher then it goes reverse and you're like no no no it's going to go back to where it was and then I’ll make more money and then it keeps going down and down and down and down and you're like no no eventually it'll go back up to where I entered and I’ll get out at break even this snowball effect completely you you got in on a trade with emotion and you didn't get out even when you were in profit and your loss threshold does not exist so you blew your account eventually if this is you welcome to the club you are a part of the 95 percent of traders that lose money but that's okay because i have a solution for you guys

3. A Typical Trading Mistake Example

so jumping onto the charts i want to show you one example of how this happens day in and day out now i can't express to you enough how perfect this is ready we see this big sloping green up everything's going we get this massive bullish engulfing we've broken previous levels of whatever you get in on a trade the next candle starts going red but because you don't have a good strategy and your stop losses are too tight these two next red candles stopped you out then it starts consolidating and then you get another bullish candle and you're like oh my god i'm going to get in on this it's going up so you buy again stop losses are way too tight next three candles stop you out this next candle goes up and you're like oh my god see i knew it was going up the whole time i'm gonna get in on this and i'm gonna hold it stop loss is too tight you get stopped out it happens again and again and again and again to the point where you're like okay last one i'm holding it forever and all it does is go down this is the typical waiting for the gambler mentality of trading like people capitalize on this day in and day out

4. Rule #1 – Have a Rules-Based Trading Strategy

this is why you have to have a rules-based trading strategy what do i mean by rules-based trading strategy when you are starting out day trading you have a strategy right and then you back test it and then you demo it forward testing it this strategy is the only thing that you should use so say for example your strategy is a moving average strategy and you only go for short positions when it's below the 21 sma and long positions when it's above what you also need to have is multiple confluences so we are below the 21 sma we're showing bearish momentum that's two and then let's say you're using doji candles as part of your strategy then you get a doji bearish engulfing and you're like cool i'm in on a trade that is three confluences that you use to enter your trade that's what having a rules-based trading strategy is you have to have these three things minimum to hit in order for you to enter a trade you do not get in on a trade because the price is going that's wrong never place a trade literally just get a piece of paper write down your rules you do not enter a trade until these three things or four things or five things are met when you're looking at the charts and you're seeing something don't click the buy or sell button check your list make sure you've hit every single one of those then you'll know it's not emotional it's strategic then you get in on a trade so rule number one is rules-based trading you have to trade on rules science bro

5. Rule #2 – Do Not Trade on Emotion

rule number two do not trade on motion like i mentioned before when you get emotional that's the gambling mentality that's market manipulation at its finest basically teasing you with something you fall for it and you're stuck in a trap it happens time and time again and it's why 95 percent of traders lose so rule number two do not trade on emotion

6. Rule #3 – Use Proper Risk Management

now rule number three is an extremely long topic i've made a separate blog on that it is risk management right here proper risk management when day trading is the most crucial thing ever because if your rules-based trading strategy is set to where you're risking one to four meaning that if you're risking one to two percent per trade and your reward for that is anywhere from four to eight percent that means if you win one trade you can afford to lose the next four and still be break even proper risk management is paramount when day trading and it helps your psychology because it's no longer emotional trading it is systematic it is rules there are techniques that you must follow in order for you to do a trade think of your day trading as now being a program your trading brain now will not execute a trade unless these parameters are met programming is the same thing they're all if and then statements so rule number three is proper risk management never ever click that buy or sell button without having a specified take profit and a specified stop loss in place

7. Rule #4 – Do Not Overtrade

rule number four is do not over trade the tendency for most people especially if they're like me and they can sit in front of a computer and watch the charts all day is to get in on this pair this indices this crypto and it's like 57 trades running at the same time and it's breaking apart your focus you're looking at too many different things at the same time and that's where mistakes come into play i've done it several times where i'm looking at usd cad doing my analysis on that then i pull up my phone on metatrader4 i type in you know whatever and i place a trade and i realize that i'm i just placed a trade on gbp jpy when i'm doing all my analysis on usd cad do not over trade do not look at too many indices too many 4x pairs focus on two or three too many pairs too many indicators too many lines on your charts simplify it it's not complicated so rule number four keep it simple

8. Rule #5 – Do Not Revenge Trade

and the most important rule of all rule number five do not revenge trade what's revenge trading say you just lost two thousand dollars on a trade and you're like boiling inside just furious and so you're looking for the next move and like trying to get your money back because it's my money and the market just stole it from me and you start getting angry and you're completely throwing away your rules-based system you are over trading like a crazy person trying to get that money back as quickly as possible and what happens when you trade with emotions you lose time and time again because the markets are looking for people like you getting emotional falling for trap after trap after trap and instead of just losing a couple thousand dollars on a trade you end up losing 10 15 or 20 000 dollars throughout the day because you're angry and you're revenge trading so rule number five is do not revenge trade if you are in a bad mood if you've had an argument with your spouse stuck in traffic super anxious do not trade if you are angry turn off your phone turn off your laptop get away from the charts do not trade it is the worst thing you could possibly do ever

9. Final Advice: Stay Calm and Be Systematic

doing these things practicing on a demo account really having a strategy that is rules-based it completely alleviates all of the emotion from trading i used to be such an emotional trader where i would get in a trade and i'd start sweating and like oh my god is this gonna go now when i place a trade i look and i have my system and i get in a trade i set my take profit and stop loss and then i walk away i'll go have a coffee read a book like i have no emotion behind it because my strategy has proven to be successful over time so i just do the trade and i like i'm calm all the time i don't worry i don't stress about my trades and it's really really really refreshing compared to how i used to trade covered in sweat so just relax man keep it simple have rules watch all of my blog if you want to learn specific strategies on how to day trade i mean some people like to scalp some people like to hold positions for a few days my blog have a plethora of all of that information so go through my blog set up a demo account start trading casually it's no risk with a demo account so that'll calm you down immediately then after a month of you know constantly trading day in and day out you'll see yeah my system works now i can pay in real money maintain my system and just slowly get profit over time building and building and building and building your forex account or your trading account or your crypto account whatever you're looking for

10. Closing

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