Trading mentality

Stop loss mentality before trading

⑴ Calculate the most reasonable stop loss position
Risk control has always been the first element of trading. Don't set stop losses based on greed, and don't set stop losses too narrow because you want to trade more positions. You need to strategically set stop losses so that your trades have just the right amount of room to fluctuate.

⑵ Accept potential losses
You need to mentally accept the fact that any deal is likely to fail. No matter how good a trading signal looks or how confident you are, it can still end up failing. If you actually accept this fact, then you won't risk more and won't do anything to try to avoid losses; such as leaving the break-even point too early, or maybe even trading without a stop loss.

⑶ Accept the fact that transactions take time to run
Before you participate in a trade, you must first mentally accept the fact that you may lose money, then you won't try to avoid it during the trade, you won't adjust your stop loss, or otherwise interfere with your trade. Just accept any fluctuations before the market finally reaches your profit target. If you're trying to respond to every bit of fluctuation in the market, then you're going to need a very strong heart, which is obviously unrealistic.

Position attitude during trading

⑴ Let the market prove you wrong
There is a pre-set level range on the chart. If the price exceeds it, it means that your subjective wishes are not recognized by the market. At this point, no matter how confident you are in trading, you should come forward and understand the market's instructions.

⑵ Retracements and losses are normal
According to Kahneman's “outlook theory,” most people are risk-averse when faced with gain; most people are risk-averse when faced with loss. During the trading process, it was discovered that there were many traders carrying orders, while there were few long-term trend traders. This is also in line with the conjecture of the theory of prospects, and it also proves from a psychological point of view that traders want to settle down when facing upcoming profits. Even a small decline will be the last straw that will crush our mentality.

⑶ Trading profits depend on time
If you stare at the market for a long time and get bored, you may react to the market by closing the trade early or making some other stupid trading mistake. It's necessary to keep an eye on the downturn once in a while, but most of the time you don't need to do anything. If you find yourself constantly trying to adjust profit targets, stop losses, or exit trades or increase positions, then you're probably overthinking and overengaging.

　　The key thing to remember when trading is that if you don't let the trade run itself and don't give it time to work, your trading advantage won't have a chance to work for you. Whatever your reason for trading, let it work for itself and give it full trust until the market proves your trading logic wrong.

After the transaction is over

⑴ The mentality will be affected by the last transaction
Once your trade is over, it's hard to get back to the state of mind you need to wait patiently for the next high-probability trade without overtrading.

A winning trade is almost worse than a losing one because it can make us overconfident in our trades, which in turn causes us to enter low quality trades soon after winning.

After losing a trade, coming back to the market with a low quality trade setup makes you feel the urge to make back the money you just lost. This is wrong; it's not proper trading psychology.

⑵ Every transaction is unique
In theory, the success or failure of the previous transaction had no effect on this one. You must truly understand and accept that every trade is unique and that you may fail in any one; continuous profits and losses are common.

The right thing to do after winning or losing a trade is to be disciplined and patient, and stick to your trading plan; wait for the next high-probability opportunity.

The easiest way is to remove yourself from the chart until you calm down and return to your initial state of mind, where you're neither overconfident about winning, nor overly frustrated by losses.

Money not only affects our quality of life, but also our trading mentality. Set a profit target and extract profits within a fixed period of time. Withdrawing a portion of the profit is a great way to reward yourself for fighting for transactions, and it can also guarantee that some of your money will fall into your pocket, so you won't lose it, and comfort our mentality materially.