Psychology is overrated in the trading world. That is what I thought before reading The Complete Trader by Mark Douglas. This book opened my eyes to what trading psychology truly signifies, and since then, my entire approach has transformed.
What Is Psychology in Trading?
Trading psychology is your ability to understand the reality of trading—and, more importantly, your capacity to accept that reality and work in alignment with it.
This concept can be broken into two key sections:
Understanding the Game:
Psychology starts with knowing what trading really means.
This includes understanding the principles of trading, how people make money, and the rules that govern success. It’s about knowing that trading isn’t just about guessing market directions—it’s a game of probabilities, risk management, and discipline.
Accepting the Reality:
The second part is harder. It’s about accepting how the game works without trying to bend it to fit your personal desires.
This is where most traders struggle. As humans, we naturally want to control things and make them align with our expectations. But in trading, the market doesn’t care about what you want—it operates on its own terms.
Why Do Traders Struggle With Psychology?
At the core, whenever your trading psychology "sucks," it boils down to two things:
A lack of understanding about how trading works.
Without a clear grasp of trading principles, emotions like fear, greed, and frustration take over.
An inability to accept the rules of the game.
Even when you understand trading, it’s hard to accept its realities—losses, uncertainty, and the lack of control.
Psychology in trading isn’t a buzzword; it’s the foundation of success. It’s about developing the mental discipline to understand the game, accept its realities, and work within them—not against them.