Trading Psychology – Why do we fail?

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Trading Psychology – Why do we fail?

Trading is becoming more popular day by day. Today, many young people willing to learn about how to trade in the stock market with huge profits in mind. Unfortunately, there is a lot of misconception about how exactly stock market works and new traders blindly jump into the trading; this led many traders to lose money. The studies have revealed that only 5% of traders make money from the market and the other 95% fails in the market.

So, in this blog, we will discuss 5- emotional stages of trading psychology. That will help you to become a part of 5% traders.

1. Unconscious Incompetence

 This is the stage from which we all go through. Want to know what happens here? – The answer is at the beginning stage, you came to know from a magazine or video about traders who became millionaires from the stock market and after listing to this, and new traders gain interest in this business and start trading. After a few trades luckily, you make good money. So, after a few days, you will start to believe that you are an established trader and start trading without any analysis. Within a short period, you will lose all the money.

Most of the traders end their trading careers at this stage. 

2. Conscious Incompetence

At this stage, traders realize that how much knowledge you have about trading. Now you realize that you need to start learning so, you will start getting the knowledge from different sources like YouTube videos, different eBooks. After this process, new experiments start on new systems and strategies. 

This stage can last from a few months to years and 50% of trades will give up within 3 months. Only a handful of traders will go ahead.

3. The ‘ ohh’ moment

This is the moment when you will get to know that there is no problem with the system. You realize that in the stock market, you don’t need to use all the technical tools. You can make money without using any indicator and earning profits in the stock market is more than a strategy or system. It requires patience, proven plans, and very important discipline. Even when you lose from the stock market, you understand that it is just a process and you will learn from your experience and start the new inning with discipline.

4. Conscious Capability 

At this stage, all the things go well for you and you will start trading only as per your plans and setups. If your trading system gives a signal to enter the trade, then only you will take a trade otherwise you will wait for the right opportunity. Before entering into this phase of your trading, most of the time many traders break the rule and with the fear of missing out (FOMO), they jump into the trade without any system and make a loss.

At this stage, you are consistent with your wins by using your trading system and trading rules. Only 10 to 30% of traders can reach this level.

5. Unconscious Capability

At this psychological stage, only a few patient traders can reach. It takes years to achieve this level. When you enter this stage, you have years of experience and with experience, you will have a clear understanding of reading charts and technical analysis. Now, Entering and exit the trade will be a normal thing for you.

The journey of every professional trader starts with the initial stage, where they make a loss in the stock market, and all the profitable traders pass through all these five emotional stages of trading psychology.

About Us

Most of the traders are making losses and losing their mental temperature and it is not good for a trader. Trading psychology will be helpful for the traders to think the stock market altogether from a different perspective. Through our blog, you will get some new ideas to think about the stock market. Trading Fuel gives the generation of new materials and information for the learners, traders, and investors to get them the knowledge about the financial world. Read more from our blog site and stay updated with the stock market.


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