Trading With Investment's Mentality - Trading With Investment Psychology

This time, the VWA community is having a lot of confused opinions between trading or investing. As someone who has been exposed to the Forex market since 2006, starting to study the US gold and stock market since 2008 (the period of economic crisis) until now, I have also read a lot of books on finance from trading. to investment, then attended some intensive training courses, learned a lot of mentors online, and also paid a lot of money. Therefore, I would like to take the opportunity to summarize a profound lesson about trading that I can share with you. This is of course mainly for newcomers to the market but I think experienced traders should also refer.

In fact, the nature of trading is just a matter of psychology. You can have good fundamental analysis, read charts very well but if you don't control your psychology then I think 90% of you will lose. In fact, the numbers also show that 90% of retail traders lose, only about 5-10% are profitable. Trading game is actually a psychological game between greed & fear (greed and fear). But in my opinion, the most important thing is to control greed, not fear. Why ? Because most losses are due to greed, but no one loses because of fear. You may disagree with this view, but for me it is a guideline.

Like you, the first few years I struggled with trading. The problem here is not that I do not analyze well. Actually, my analysis is quite correct, but because I can't control my psychology, the result is still negative. It was only when I attended a free seminar by Anton Kreil that I really opened my eyes and developed a strategy to control my mind. Speaking briefly about Anton Kreil, this was once one of the famous traders of Goldman Sachs, used to hold the position of head of prop trading desk at Goldman Sachs. Currently, he is the director of the Institute of Trading & Portfolio Management. In addition, he also participated in the program Million Dollar Traders, a British reality TV show about trading is very good. You should also watch to learn more.

What I have learned from Anton Kreil about psychological control and what I have learned from myself has given me a method in trading that is "trading with investment psychology". Why trade with an investment mentality? Many of you think that trading is having to double and triple accounts. Reality is not so. And if everyone can double and triple their accounts, then this business is too easy. I would like to summarize the following points:

  • Manage your risk, never trade over your limit and always remember to be patient
  • Trading must be considered a serious business. When it comes to business, you should understand that a normal business only needs 15-20% profit per year after the cost is too successful. There are businesses that need 2-3 years to be profitable. So you need to apply the same mindset to trading, if you dream of getting rich quick, you will definitely lose.
  • Find yourself a trading method or trading strategy that gives you the most stable profits. The result is not only counted in 1 trade but the final result of the whole week, the whole month, the whole year. If you can have a stable trading strategy and method that can yield 20-25% per year, imagine if you apply that method for 10 years with daily reinvested returns. How much will you earn per year? Remember the first lesson in finance is compound interest.
  • When entering buy or sell volume, always remember that you must enter with a volume such that your margin can withstand at least 70-80% of the price movement. That is no different than you are investing and any short-term price fluctuations will not make you too worried about losing sleep, and not afraid of margin expansion. Don't focus too much on the rules that people teach online like Risk/Reward Ratio that must be 1:2 or 1:3 etc. All of that is pointless because you're not a computer. Or how to minimize the risk. Always keep in mind that risks come with rewards. So don't expect high returns if you take risks poorly. But the most important thing is that we do not have to get rich after 1 or 2 trades, but the final results of the whole year. Please keep this in mind.
  • Risk-free is the best trade ever. I often tell mentees that trading without risk is the best trade you can have. Why risk free? Actually, there is nothing risk free at all. But my experience is that if you have entered and the market moves in your direction then move the stop loss back to the entry. At this point you will have risk-free and unlimited gains. You can also use trail stops to protect your profits.

Above are some of my conclusions about psychological control in trading. I am confident that if you can practice and control your psychology well, your probability of winning has already increased to 80%. And the profit level now will come on its own and will not just stop at 15-20%.