Trading psychology refers to the emotions and mindset of a trader as they make trading decisions. It can encompass a wide range of factors, such as emotional control, risk management, and discipline.
Trading psychology can have a significant impact on a trader's performance, as emotions and cognitive biases can lead to poor decision-making, impulsive behavior, and other negative effects.
Fear and greed are two common emotions that can affect trading decisions. Fear can lead to a trader exiting a position too early, while greed can lead a trader to hold on to a position for too long. Both of these emotions can result in missed opportunities or losses. Having a sound understanding of trading psychology and being able to manage one's emotions effectively can help traders make more rational decisions, stick to a trading plan, and avoid common pitfalls that can impede their performance.