The Truth About Trading Psychology No One Talks About: Why It’s Likely Psychology Isn’t Your Problem

I want to disclose the truth no one talks about in terms of trading psychology. Let’s first revisit the definition of trading psychology.

What is Trading Psychology?

Trading psychology refers to the emotions and mental state that influence a trader’s decision-making process. These emotions and feelings can negatively impact trading success by creating biases or altering actions, leading to mistakes. Traders who understand trading psychology can develop strategies to limit these emotions or biases, ensuring actions that align with their best interests.

The Biggest Secret About Trading Psychology

The biggest secret no one talks about in regards to day trading psychology is this: What exactly are you applying this psychological focus it to? This is key to understand, because if your psychology isn’t enhancing your trading, your personal development won’t have the impact needed to improve before ultimate discouragement sets in.

The Truth About Trading Psychology No One Talks About

The Intersection of Trading and Psychology

To break it down, we have the field of trading and the psychology of it. Psychology, in general, is defined as the scientific study of the mind and behavior. When applied to different fields, psychology is broken down into specialized areas, such as workplace psychology, educational psychology, and trading psychology.

The Need for a Clear Hypothesis

Remember, psychology is a field of science. This means you need a clear hypothesis to apply trading psychology effectively. Without the foundation of a trading system, your trading psychology will never pay off. To understand what a complete trading system entails, read the article here .
There are many times new and intermediate traders have ambiguity in their system. This lack of clarity on what to do exactly is easily exposed when these traders try to participate in the emotion-inducing financial markets.

For example, Trader A knows exactly when to exit the market because it’s in their trading strategy. Trader B has ambiguity in this area and goes off feeling. When Trader B exits the market after dipping from peak PnL, they might blame their psychology, saying it was greed and they should have exited at a certain level. They then beat themselves up mentally and believe they have trading psychology issues, when in fact, that area of their business lacks the clarity to apply psychology to.

A good rule of thumb for day traders is: if you  don’t have a plan to follow in a certain situation, then psychology isn’t relevant.

The Real Foundation of Trading Success

The truth is, the foundation of trading success lies in having a solid trading system first. Your trading psychology should enhance this system, not replace it. A robust trading system provides the structure needed to apply psychological principles effectively. Despite the message from videos and trading influencers, trading strategies area dime a dozen. To read more about a trading system foundation, check out this article Unveiling the Secret to Day Trading Success: The True Foundations of Trading Psychology.


In conclusion, while understanding and managing your trading psychology is important, it must be applied to a well-defined trading system. Without this foundation, psychological strategies alone will not lead to success. Focus on building a solid trading system first, then use trading psychology to optimize your performance within that system. Consistently reviewing and refining both your psychological approach and your trading system is essential. By maintaining discipline, learning from mistakes, and adapting to market changes, you can enhance your trading outcomes and achieve long-term success in the financial markets.

Key Takeaways:

  1. Emotions and mental states influence trading decisions.
  2. Secret Insight: Trading psychology must enhance a trading system to be effective.
  3. Importance of a Clear Hypothesis: Applying psychology effectively requires a solid foundation in trading.
  4. Trading System First: The foundation of trading success is a robust trading system.
  5. Optimizing Performance: Use trading psychology to optimize performance within a well-defined trading system.

Leave a Comment

Your email address will not be published. Required fields are marked *