When it comes to trading doing research is the most important part of the analysis, but do you know too much research can harm your trading? Doing research, reading charts, and thinking about your trading are good things but up to some extent. Once you start to overthink about them, then these things can harm your trading. You must have heard the quote “Excess of Anything is Bad.” The same psychology applies in trading as well.
In today’s article, we are going to discuss these things in detail, and also, I am going to tell you the solutions for these problems. If you analyze this problem carefully, you will come to know that, very cause of this problem is fear of losing money. However, in trading, trying to control the market is a big mistake, and it is an almost impossible thing to do. The only thing you can control in the market is you.
Many traders try to control every aspect of the trading, and as a result, when a trade goes slightly against them, they become mentally unstable to handle that trade, and they quickly adjust or exit that trade. Hence, they miss out on a potential target. This is the common problem amongst the traders that occurs because of not knowing the difference between the things that can’t be controlled and things that can be controlled.
To tackle this problem, you have to stop knowing everything. You have to accept the fact that you can never know every factor that can move the market up or down. In simple words, it is impossible to know the reasons behind the particular direction of the market. You can only know what happened in the past and what is happening now and take that information as your reference and frame your trading strategy with proper risk management techniques to protect your capital.
But searching for the news and analyzing the charts for hours won’t help you to improve your trading. No doubt analyzing the charts is an important thing but up to a certain extent. You will never know what will happen in the market but as a trader, you have to think in probabilities and manage the risk for long-term success. This is how you can make money in the market.
When you finally understand, accept, and then let go of the instinct to control the market and micro-managing every aspect of trading will help you to become a profitable trader, then you will be trading with the proper mindset.
One of the main reasons behind this problem is the trader’s psychology and poor risk management. Many traders, when they enter in a trade they only think of profit and hence, they fail to manage the risk, and traders who manage their risk at every price change tend to think that they can manage their loss in any situation. This is the wrong approach.
Losses are part of the trading but, you have to keep in mind that you should cut losses fast and hold your winning trades as long as you can. That’s what makes you profitable. Remember, any trade can turn into a loss. Trading is a business, and losses are the cost of doing business, you have to accept them until they turn into big losses.
Overthinking and overtrading are the two common problems that occur because of the urge of trying to control the market and micro-managing every aspect of trading. When you do a lot of research and observe charts for longer times, a lot of trading ideas start to surround your mind and that creates confusion.
Watching the intraday charts all day and trying to catch every minute movement of the market is nothing but micro-managing every little aspect of your trading. The solution for this problem is to trade with a trading edge. If you have not developed that, try to develop it as early as possible.
Plan a trade and trade a plan, that’s what you have to do. Take a trade only when your system tells you to do so. Don’t analyze unnecessary noises, just trade with a system and let your edge play out. Follow the daily routine of finding the trade that meets your setup and if you are unable to find the trade, then don’t trade that day. After all, it’s not compulsory to trade every single day.
You can watch the market going up and down all day and lose an immense amount of energy by doing so. The solution to this problem is to simply turn off your computer and go away.
This sounds odd but, as we mentioned earlier you have to develop a trading routine. Also, take some time off to re-focus on your trading strategy. You have to decide when you will analyze the market and when you won’t.
If you are thinking of controlling the market and managing every little aspect of trading, you really have to reconsider your decision of doing trading. It may sound rude, but you have to change your psychology if you do not want to harm your trading. Once you enter the trade, set a stop-loss and target and stop looking at the PnL.
A market is a machine, and if you handle it with a certain plan or instructions it will reward you, but if you handle that machine with emotions, it’s definitely going to punish you. There are millions of participants in the market, and controlling them is an almost impossible thing. You can only control yourself and trade with an edge.
Charts represent the psychology of market participants. By using price action, you can analyze the market conditions and chart patterns that will help you to take favorable entries with a good risk to reward ratio. This is the only way by which you can control yourself and make consistent money in the market.
If you want to know more about Risk Management & Intraday Trading Strategies you can refer to our previous blog on
Importance Of Risk Management In Trading and 10 Best Intraday Trading Strategies.
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Nice article by the booming bulls team. I loved how you expressed that the most important thing in market is price action and market psychology.
Thank you, Taranpreet, glad that you find the blog helpful. We constantly try to bring helpful blogs for our traders and will continue doing so.
I agree
awsm sir
Thank you, Mandeep, glad that you find the blog helpful. We constantly try to bring helpful blogs for our traders and will continue doing so.