Mark Douglas on Psychology of Trading.

Mark Douglas states that success in trading is 80% psychological and 20% one’s methodology. If we
make an inventory list of a trader’s abilities in order to succeed in trading then technical analysis skill
is, though necessary but, just a small part of the overall business. Trading has much more to it than
finding entry & exit signals based on technical analysis. Trading successfully requires psychological
abilities which include-

1. Creativity to develop strategies which have an edge.
2. Patience to wait for a high probability opportunity.
3. Confidence to take risk and pull the trigger when the opportunity arrives.
4. Discipline to follow his/her rules.
5. Ability to stay cool & calm during pressure situations.
6. Flexibility to change views/opinions to get in sync with changing market conditions.
7. Humility to accept mistakes when market moves in opposite direction to his/her entry.
8. Perseverance to learn and improve his/her trading.
9. Courage to be able to trade after a string of losses.
10. Love for trading which can make all of the above and everything else possible.

This is not an exhaustive list and there are many other psychological aspects to trading. I am not
sure if a trader can have all the qualities listed above at all of the times. Traders are successful only
in proportion to the psychological abilities they show. Also we all should strive for perfection while
making best use of whatever we have got.

When we trade we get to know more and more about our strengths, our shortcomings, in short our
character is revealed to us.
As always, esteemed readers are welcome to share & enhance knowledge.

(Contributed by Jitender Yadav)