Ahmadreza Jabalameli

Trading experience

12 +
Since 2004

Teaching experience

1 +
Since 2018

Teaching to

8563 +
Students

Online Training

3000 +
Hours

Trading Psychology and it’s 5 golden principles to increase your income

Trading psychology is an important thing to consider in order to succeed in financial markets.

In this article, I am going to clarify the high importance of trading psychology through 5 golden principles, as 80% of your market success actually depends on it.

Considering these 5 simple but extremely significant principles, your trading life will drastically change.

Following these principles, you may become among the top 20% of successful traders.

These five principles are as follows:

1. Avoid emotional trading. About 99% of inexperienced traders’ trades are emotional!

2. Believe in frequency of trading positions. Lack of this attitude can be extremely costly for you!

3. Optimize your trading strategy. Failure to do so may result in a whirlpool of false strategies.

4. Never “attack” the market to revenge. Revengeful trading takes place at the level of the mind that you realize after entering the market.

5. Never be greedy. Greed is a trap that gets in your way when you succeed.

Join us to provide you with tips that are the result of Mr. Jabalameli’s years of experience and can help you succeed.

What is trading psychology and why does 80% of your success depend on it?

Whatever action you take, first you think about it and then decide.

This is how your trading process actually works:

1. Goal setting and decision making.

2. Trading

3. Reacting to events

4. Choosing emotion

You decide to trade in the market. However, before making a decision, at first, you should set your goals.

This goal setting can put you on the path to success or failure from the beginning.

If your purpose is to trade and make $200 or 60 percent profit, you can never succeed and you will base your trade on failure from the beginning.

I do not mean one or two trades, but I am talking about a system that always works for you and is clearly stable. 

The psychological issue that causes you not to be able to make profit by goal setting is that when you decide to make profit in the market, for example $200, you open your chart for this purpose.

Your mind is completely focused on this subject and your RAS (the reticular activating system, a network of neurons located in the brain that is generally responsible for the behavior), which is responsible for filtering input information, activates and shows you the wrong trading positions to justify yourself for entering the market.

The main problem is that when traders lose in the market, they do not even realize that this loss is simply caused by a psychological issue.

Hence, you have understood so far how goal setting in the market can change even your decisions.

You may say we have a trading plan and we proceed according to it.

Yes, that’s right.

However, you should keep in mind that every trading plan contains a series of rules.

These rules have some signs and you must see them before entering a trade.

Your RAS will react exactly when these signs are confirmed and will automatically go in the wrong direction.

The next step is how you react to this.

You’ve set your goals wrongly and now you are entering a trade that will probably results in nothing but loss.

You are completely confused whether you should close your trade or keep it open, because the market may move as you expect.

This is when your RAS is activated.

It reminds you of your purpose again and says that you must get what you want – making a profit of $200!

Your vision is completely confined to the ever-increasing loss, and you think only of the potential profit.

This process continues as far as your stress of constantly increasing losses gets to a point where you close your trade.

Now, in the next step, your RAS will be reactivated because of the wrong goal setting and making of decisions.

Therefore, after you exit the market, you immediately ask yourself what to do, as you wanted to make $200, but lost $400.

Most people decide to get their money back from the market in this step. These are only their dreams, though!

They repeat the same process again with the wrong making of decisions and goal setting, but this time they will have to pay much more losses.

Hence, you have understood so far how important trading psychology is and why 80% of your success depends on it.

Further, we will explain how to prevent such losses by considering 5 important principles and reach profitable trades.

Five golden principles. If you do not consider them, your failure in trading will be inevitable!

Be sure to read these 5 principles of trading psychology carefully several times and take notes of its important points and review them before trading.

Principle 1: Avoid emotional trading.

Trading in the market is extremely dangerous when you are emotional.

These emotions can be fear, greed, happiness, false confidence, doubt, excitement and so on.

Suppose, for instance, that you have already made profit and exited a trade. Your profit was so great that you could not have imagined and in the next step, you may start comparing your income with your friends’ and relatives’ earnings!

At this moment, the dominant emotion in your brain is pride and excitement, and the idea comes to you that you could do it, so it is over and you have gone through the steps of success.

In the meantime, you decide to see your profits again on your trading platform to be a little more proud of yourself.

You randomly open a chart and see a potential position in front of you. It gives you the impression that you can trade any position in the market, that you have succeeded and learned all the necessary skills.

You are currently trading without reviewing your trading checklist.

Whatever the outcome of this type of trade is, it will be %100 failure in the long term and will cause frustration and destroy all the profits you have made.

What is the solution?

Before trading, be sure to check your emotions and make sure that you do not enter a trade based on emotions.

Trade in the market only when your emotions are neutral, it will help you make the right decision without cognitive biases.

How do you behave when your emotions are neutral?

  • Trading outcome does not matter to you at all and you focus on entering the market exactly according to your trading plan.
  • Regardless you make profit or lose, you will be neither sad nor happy.
  • You do not consider the opinions of others at all and you only do what you know or believe is right.
  • You always focus on enhancing your skills, fixing your weaknesses and increasing your strengths.
  • When your trade is at a loss, you will handle it very easily with no stress and you will exit the market with the least loss.
  • You carefully record all the results and what you learn from your trades, and you regularly review your records.
  • Your mind is completely calm before and after trading and focuses only on the right things.

Principle 2: Believe in frequency of trading positions

What is your attitude towards the number of trading positions?

One of the most important topics in trading psychology is to believe in infinity of everything.

Consider a person who wrongly thinks that if he does not take advantage of the market right now or does not use a certain position, he or she can never achieve the goals and aspirations.

How do you think this person will react to this wrong attitude?

This person is constantly looking for opportunities and always focuses on using any situation in any possible way. This immediately puts the person into emotional trading.

To solve this issue, just change your attitude.

Think of trading positions as about your city buses: if you arrive late and miss your bus, do you fill your whole being with negative emotions and a feeling of fear and greed, or do you wait a while for the next bus to arrive?

Principle 3: Choose your trading strategy correctly.

First, let me talk a little bit about the trading strategy that 20% of your market success depends on.

90% of people, who are currently losing money in the market, have an outdated trading strategy and therefore their result is nothing but loss.

These people first need to choose the right trading strategy.

How do you find out if your trading strategy is outdated or not?

Quite simply, if you use one of technical analysis methods, your trading strategy is 100% obsolete and you can never achieve your financial dreams in the market with it.

Indicators are actually the basis of different types of technical analysis methods that are themselves based on mathematics and price data.

Elliot, Gann, Ichimoku, Harmonic patterns, Candle Stick patterns, Andrew’s Pitchfork, Price Action and others, all fall into the category of technical analysis.

These methods have been popularized by developed countries in the so-called third world countries and its main profit goes to brokers.

What is technical analysis and why does it cause traders to fail?

The truth is that in the financial markets, a very small percentage of brokers’ profit is from your trading commission and a large percentage of it (more than 95%) is a broker’s income from your losses in the market.

The broker only connects you to the market when you make enough profit in your trading account that he can no longer afford to pay your profits.

This is exactly why brokers constantly try to show the outdated methods as valuable with various advertisements and at a very high cost.

What is the solution?

You must look for trading, not analysis.

Jabalameli Priceaction is the correct science of trading in all financial markets, and in this way, you decide to trade in the market based on market facts without using any indicators and oscillators.

Video

Download free Jabalameli Priceaction Trading course right now!

Principle 4: Never “attack” the market to revenge.

Revengeful trading happens right after you lose.

In trading psychology, it is also called overtrade.

This type of behavior occurs when your dominant emotion is fear, despair and desire to revenge.

Fear of that you have lost your investment and no choice but to take it back from the market.

Despair of bad results you have got and now you want to get rid of this feeling by making profit.

Revenge of the market because you think it is the main culprit and you have to get your money back anyway.

What is the solution?

Revengeful trading only happens when you have not been able to exit the market well.

Jabalameli Priceaction Trading teaches you the exit strategy and you are only allowed to exit the market when the reversal signs are seen to move the price.

If you have not yet learned Jabalameli Priceaction Trading and you are looking for a quick solution, just close your trading platform immediately after exiting the trade and start writing.

Write down exactly what you’ve learned from the trade, and commit to never repeat your mistake in the next trade, then reopen your trading platform to trade when you reach neutral emotions.

Principle 5: Never be greedy.

This is one of the most important principles of trading psychology, because almost 99% of traders present in the market have tasted greed and its bitter result at least once.

Greed destroys all your profits and turns them into big losses.

Greed in trading means not to close a trade because you decided to make $ 300 profit but now you are making $ 299 profit. This decision results in tolerating extremely high and dangerous stress or losing the whole profit you have made.

Just be realistic to control greed. This emotion is shaped in the mind very clearly and you can easily touch it. Whenever it comes to you, stay away from it and do not make a decision based on it under any circumstances.

Conclusion

As it was explained, 20% trading strategy and 80% trading psychology influence your success in trading profession.

If you want to achieve all your financial goals and experience continuous income, you must do two things right now:

1. Choose the right trading strategy. We offer you Jabalameli Priceaction Trading and you can start learning for free from now on.

2. Pay attention to trading psychology that we have taught you and remember 5 golden principles from this article. Those will help you to prevent many mistakes.

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