90% of trading is psychology. Learn to see the traps of the mind and build discipline.
Fear of loss leads to premature exits and missed opportunities
Greed leads to overleveraging and ignoring risk limits
Hope keeps you in losing trades, turning small losses into disasters
Revenge trading after losses leads to emotional, high-risk trades
Note: Emotions are normal. The goal is not to eliminate them but to have rules for when they appear. That's where algorithmic trading helps—robots don't feel fear or greed.
After 5 winning trades, do you feel the next trade is more likely to succeed?
Do you hold losing trades longer, hoping they'll recover?
Do you remember winning trades more vividly than losing ones?
Do you think you predicted a move correctly, even if you didn't act on it?
Do you look for news that confirms your existing trade position?
Do you think you're better than average traders?
Important: EAs don't replace psychology work—they enforce your plan. You still need to: design a good strategy, set correct parameters, and avoid manually interfering with running trades. Link psychology with risk management from Chapter 8.
Emotions are normal and natural in trading. The goal is not to eliminate them, but to create clear rules for what actions to take when they arise. This chapter provides practical frameworks for emotional regulation and systematic decision-making.
Take this quick 3-question quiz to reinforce what you've learned. You can skip if you prefer.
Educational Content Only: This chapter provides educational insights into trading psychology. It is not psychological counseling or investment advice. If emotional reactions are affecting your daily life beyond trading, please consult a qualified mental health professional.
Risk Management Connection: Psychology and money management are deeply connected. The routines and rules you build here work best when combined with proper position sizing and risk limits. Review Chapter 8 to ensure your technical parameters support your psychological discipline.
Individual Responsibility: While EAs can help maintain discipline by following preset rules, you remain responsible for setting strategy parameters, monitoring performance, and making adjustments. Automation is a tool, not a substitute for informed decision-making.
Not Financial Advice: The scenarios, bias tests, and routine suggestions are educational frameworks. Your trading decisions and risk tolerance are personal choices that should align with your financial situation and goals.