In the fiscal year 2022, the number of individual investors actively trading on stock exchanges hit new high. In fact, new investors registered on the market were not just limited to just metropolises or large cities but also to small cities. 

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Kirti Agrawal said becoming a successful trader requires dedication and patience. However, profits can be extremely rewarding if one takes the time to understand trading psychology principles deeply as mastering trading psychology can reduce anxiety and stress while improving overall performance as a trader.

"By recognizing emotional biases and developing strategies to overcome them, you can learn to stay ahead of the curve and make better long-term decisions in any market environment. Without the right trading psychology, we will not be able to execute our decision with consistency, discipline, and perseverance. The right mindset in trading is the most important edge," added Kirti Agrawal. She also gave a quick guide to the right trading psychology:

Guide to Right Trading Psychology

1) A positive attitude is essential for good trading psychology. You need to believe in yourself and your ability to trade successfully to be profitable.
2) You need to have realistic expectations when trading. Don’t expect to become billionaire overnight.
3) You need to be patient when trading. 
4) You need to be disciplined when trading. This means sticking to your trading plan and not letting emotions influence your decisions.
5) You need to take losses without getting emotionally attached to your positions. This is one of the most difficult aspects of good trading psychology, but it’s essential if you want to be successful.
6) You need to have faith in your system or strategy. If you don’t believe in it, you will not be successful in using it.
7) You need to be able to handle stress well. Trading can be stressful, so you need good coping mechanisms to deal with the ups and downs of the markets.

Learn to control emotions 

One way to manage your psychology in market is to develop a trading plan that includes clear rules and strategies for entering and exiting trades and managing risk. This can help to provide structure and discipline and minimize the impact of emotions on decision-making.

Another way is to ensure a proper risk management strategy aligned with your trading plan; this will allow traders to react appropriately to market volatility and minimize unnecessary losses. 

Kirti Agrawal further noted "Additionally, traders can use mindfulness and meditation techniques to help them stay grounded and focused rather than getting caught up in emotions. With the help of journaling, traders can also reflect on their thoughts, feelings, and emotions and assess how they affect their trading performance.

Make Trading plan and stick to it

Having a trading plan is critical to the success of any trader. A trading plan provides structure and discipline, helps minimize emotions’ impact on decision-making, and increases the chances of achieving long-term trading goals. It should include a clear set of rules and strategies for entering and exiting trades, managing risk, and tracking progress.

To create a trading plan, traders should set clear and measurable goals. These goals should be specific, realistic, and aligned with the trader’s financial objectives.

Next, the trader should determine their risk tolerance and the level of risk they are comfortable taking to achieve their goals. Risk tolerance will be a key factor in determining the size of each trade, as well as the overall trading strategy.

These strategies should consider the trader’s analysis of the market, the specific trade setup, and the risk/reward ratio. Entry and exit points should be clearly defined, and rules for managing risk, such as stop-loss orders, should also be established.

Keeping a trading journal is a key component of any trading plan. A trading journal allows traders to track their progress, evaluate the effectiveness of their strategies, and identify areas for improvement. 

A trading journal should include details such as the date, symbol, trade type, entry and exit prices, stop loss and take profit levels, and any notes or observations about the trade. Traders should review their journals regularly and use them as a tool for reflection and self-assessment. Tracking their performance over time allows traders to identify patterns, learn from their mistakes, and adjust their trading plans as necessary.