Why do you need to know about trading psychology? This is for you to understand why two traders, no matter what their skill levels are or the amount of knowledge they know about the market, will always have different results with their trading activities. That even if they have the same stock trading strategy there will still be different endings.

For the purpose of our explanation with regards to the psychological aspect of market trading, let us assume that we have two very identical men who are into trading. It does not matter if you think of them as twins or not, what is important is that they have the same trading background, the same training, the same tools and information regarding the market and even the trend they are interested in. That they both have everything the same when they need to do trading.

And now for the sake of our explanation, we will jump forward to a few months ahead after the two traders have started doing their trading. Also since we have stated that the two have practically the same on everything that they need to get on with their trading, including how they learn trading, that we can safely expect that they will have the same achievements with their trades. But the thing is it will never be the same.

For instance, one of these traders would go on and earn big from his trading activities. While the other trader, he could have earned too but not as much as the other one. Or worse, he could have lost everything in the market. Could it be possible that they still ended up with different results?

The answer simply lies with trading psychology. This is because we have to take into consideration the uniqueness of each individual, even when it comes to trading. It is therefore important for us to understand that each of these traders had their own train of thoughts when they made decisions with their trades as well as putting their emotions into it.

For instance, if they are at the same position in a market and the trend is the same, one of them might have had some doubts with the market and decided to bail out, saving as much money as he had already put into it. On the other hand, the other guy decided to stay with the trend and was handsomely rewarded in the end. The emotions associated with the decision to get out or to stay with the market is something that no one can easily pinpoint or explain about every trader’s process of thinking.

This is also where the good and the bad trader definition comes in. The good trader will stick with his tried and tested strategy or trading system, and thus will often gain the most out of his trading. The bad trader does the opposite. Often he lets his emotions decide when instead he should have just stuck with his trading system.

Therefore the important thing to remember is that for you to succeed in any market, you will have to check on your emotions and decision making capabilities. It is not enough that you learn to trade even from the best traders. There are certain factors that you will have to deal with yourself.

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