Home > Blog > How To Manage Trading Psychology If You’re A German Trader


Trading Psychology

There are many aspects to creating a successful and sustainable trading system and one of the most crucial aspects by far is managing trading psychology. Unchecked emotions can often be a trader’s worst nightmare and can lead to misjudgment and spur of the moment decisions that set back profit potential in huge measure. Trading psychology is a concept that focuses on disciplining emotions such as anger, greed, fear and anxiety at all stages of the trading process. No matter if you’re a German binary options trader or not, it’s important to keep the below tips in mind.

Greed is a setback

If a trader is doing well in a certain position, greed has a tendency to rear its ugly head. It can be easy to fall into the trap of wanting to do better and lock in maximum profits, but the reality is that there’s a greater likelihood of failure than success. To overcome this negative trait, set limits before you enter any position and stick to it. Always avoid the urge to risk more capital than you can afford to lose.

Fear can paralyze you

If you’ve experienced hefty losses, it can be quite intimidating to get back in the game. Many traders will unnecessarily hold onto losing trades in the hopes that it will turn around in their favor. This is an obstacle to advancement and successful traders know to steer clear of this habit and let go of inopportune trades. Another common tendency is what’s known as ‘paralyze by analyze’ and occurs when traders over-analyze every chart and graph to the point that they are always hesitant to enter any trades.

Trading anxiety

Many traders will lose sleep over trades that have gone awry. If a trader has lost substantial capital on a trade, anxiety will undoubtedly fly high for any subsequent trades in the future. Catch yourself anytime you sense that you are heading into an abyss of anxiety and realize that failure happens to anyone, even the most experienced and professional of traders. Learn from your mistakes and avoid repeating what didn't’ work for you.

Keep your ego in check

Your ego usually wants to maintain a mindset of always being right. As such, when losing trades come along, as they inevitably will, you may slip into what’s known as revenge trading. Traders will often invest twice their initial investment in the hopes of making back lost profits. This is quite precarious and can unravel your risk management strategy in a matter of minutes.

To avoid getting into a trading predicament that is fueled by emotions, it will be worth your while to set trading rules prior to investing any personal capital. Know your limits ahead of time and figure out how you will approach successes and failures. Setting such boundaries, will enable you to stay level-headed, disciplined and decisive no matter the outcome. Once you have mastered your trading psychology, perfecting the technical aspects will be all the easier.