InvestorQ : As a trader, what are the psychological issues you must keep in mind?
sarah Leo made post

As a trader, what are the psychological issues you must keep in mind?

Answer
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swati Bakhda answered.
2 years ago


Profit is what you book; all else is book profits. Understand the difference between booked profits and book profits. The former is more important. Have a clear exit strategy. Don’t ever be driven by greed and fear. Know your potential losses, both in a normal scenario and in a black swan scenario. The problem is that a black swan scenario may hit you once in a blue moon but it is sufficient to wipe out your capital many times over.
You need to be clear on what you are willing and able to lose. As we said earlier, protection of capital is the foremost. Define your maximum stress taking ability in terms of seeing your capital depreciate. You not only need to stop losses in terms of position but also in terms of days, weeks, months and overall.