The 5 Essential Rules of Trading Psychology (Every Trader Must Know!)

80% of trading is psychology. You've likely heard this sentence many times before if you are someone who is interested in trading. Is that claim actually even true? And I'm telling you, the truth is it's more like 90% that determines your success. Even the most sophisticated trading strategy in the world is bound to fail if your head doesn't work during those critical moments of decision-making. In this video, I am going to show you why trading why psychology must be the essential foundation of every successful trader. The 5 rules that help you bring your psychology under complete control. And my straightforward methodology for how you can combine these 5 methods to always stay in total control. Today I'd like to take a look at something completely different with you. I've already provided you with an incredible amount of expert knowledge. The only question is, can you already trade profitably with that? And if not, what could be the reason for that? And I can tell you one thing: if you don't have your emotions under control, it's always difficult on the market. There are many different ways to, let's say, find peace with your emotions and find a way to get back into balance. But one process, and that is this 5-step process that I want to introduce to you now, is simply indispensable to understand the whole thing in depth first. And all this hocus-pocus about the right mindset and everything that goes with it, while it's partly very effective, I can tell you, at the end of the day, it's always about making sure that you feel totally neutral about what you're doing, having no fears. And we're going to look at that together now. Emotional neutrality before every decision. That means you have to be able to completely control your fears, like greed, or the desire to be right, thinking, I'm usually right. You just have to be able to control that completely. You have to stop doing that, because the market doesn't give a damn what kind of opinion you as a trader bring to the market. Emotions are always going to influence your decisions, but you can start to put an end to it, otherwise you'll just keep on moving your stops. You'll continue to take your profits too early, because what you have, you have. That's a very, very typical story with traders, that they realize their profits much too early because they probably had dry spells before that, And by doing that, you prevent your risk-reward ratio from really being able to work properly for you. You also change all your key figures that you might have previously, well, been able to experience through backtesting, simulations, or even real trades. And that is simply a huge problem for you. Buying more in losing trades, that's just wanting to be right. But why? Because you go and say, well, the market has fallen deep enough now, and I know exactly what is going to happen. Forget that. We never know exactly what's going to happen. And the worst thing you can do is then, out of, well, let's say, a sense of lack, start wanting to do something at all costs, these so-called revenge trades. And I can tell you, every professional trader always decides only based on mathematical key figures and never out of their emotions. And that is very, very important and is the first building block. You must always be able to maintain emotional neutrality 100% before every single decision. Then we move on. The process is much more important than the result because most traders evaluate themselves emotionally based on their feelings after every trade. Professionals don't do that. They evaluate based on the quality of their decisions. That means they look clearly at whether they did exactly what they had planned beforehand. And a perfect trade can just as easily be a losing trade. And a bad trade can bring in profits. Therefore, the rule is absolutely: your goal must never be to win the next trade, but your goal must always be to consistently implement your structure, your planning, to stick to your key figures, and simply to execute the next 500 or 1,000 trades correctly. When your setup is there, when you've planned where the market should go, and— and this is absolutely crucial— when you've placed your stop loss in a price range where you expect the opposite of your directional movement, and not just in points or whatever. And this mindset takes an enormous amount of psychological pressure off if you really follow it. In plain English, you have to implement your processes and don't look at every result, but use your mathematical key figures and check whether the path you're currently taking is still mathematically the right one. The next step: you must fully accept and embrace the uncertainty that is always present in the capital markets. Because there is truly nothing that works perfectly all the time. And even the very best traders in the world have losing streaks. And whoever takes these losing streaks personally, adding them to their emotional baggage, and feeling bad and uncomfortable, starts, for example, to suddenly make their position sizes smaller. Or even worse, you start strategy hopping because you think your concept doesn't work anymore, and then you start trading other concepts. That means you change your setups, you start making your stops larger, or you start limiting your profits again. And I can promise you one thing: you have to accept the moment you place your trade that the market decides whether your trade turns into a profit. I'd like to show you a quick example. Here, for example, we have a typical situation where the market simply, well, looks very stable at first. And here you can see an aggressive trend profile. The balance is up here, lots of single prints. That means there has been very strong buying. What does that do to our psyche? Two things can happen to our psyche now. One is the trend following trader who says Trade the trend as long as it's intact. The counter trader, a completely different structure, waits for the market to finally give you a signal that it can turn. Both ideas are fine at first, because if you look deeper, you see, wow, there's balance up here again, balance here. So the market starts to create a new level of equilibrium and balance above the previous strong trend. And now I can check if this equilibrium level is still underpinned by strong buyers, and can see, for example, here on the Delta, there are more buyers than sellers. Now the only question is, is this information enough for me to really make a clear trade? Maybe yes, maybe no. The question is, what type of trader are you, and what do you want to achieve for yourself? For myself, for example, I can say I have very clear key figures in the 2580 range and in the 960 range, so well above this price range here where I expect reactions. And if I'm someone who's more at home in counter-trading, for example, I can already see for myself up here that liquidity is apparently increasing, but the turnover down here is much larger. Before we get back into it, a quick notice: World Class Edge just launched. And if you want to know how really institutional traders and market makers actually trade, click the link below and secure your spot at World Class Edge. Alright, back to it. I can see that a lot of liquidity was traded down here and the market likes to strive for liquidity. But does that help me? No. The only thing I can do for now as a counter trader is plan for the market to run here, and then I can decide for myself whether it continues or not. And for that, I need the appropriate skills, but I need the emotional stability to have the ability to trade against the trend even in such a bull market. And I have to endure that because it usually takes a relatively long time. And let's take a look at what happened now. So, and here we are in the here and now. This is from exactly this moment where I'm presenting the video here, and I can see, yes, we're now running exactly to this area that I pre-selected. And now the second trader comes into play. Please keep that in mind. Now here comes the trend following trader who continues to play the long trend and can now decide down here in equilibrium Looking at this now, well, I can see that there's still an excess of buying interest. And what do I need here now? Now I need the ability to read that the liquidity is starting to dry up. This means there's no more acceptance on the downside, and ideally I can spot a reversal setup. And now I have the chance to define my risk very smartly once the setup is complete, like this, for example. And I know that the market will continue its upward trend because I've already pre-selected and decided that this is where I want my first target to be. This means both types of traders can plan a trade right here. However, the approach is different, and so is the emotional state. My expectations regarding speed are also different because counter trades like the one we saw here usually take some time. As no one is in a state of imbalance. Here, though, things can move relatively quickly again, because everyone who thinks the market is about to drop is getting further underwater. And that's exactly the psychology behind it, which is something we absolutely have to address. So, let's move on and accept that the market shows us what it's doing, and we also accept that things can go wrong, as long as the strategy has a positive expected value. And uncertainty isn't a mistake in analyzing the market. It's actually the price you pay to be able to generate returns. The next step is to know your own personality, just as I mentioned a moment ago. There's no single strategy that works consistently for every type of human personality. You have to align your strategies with your personality. This means if you're very patient, you can handle these counter trades well. If you're someone who prefers to wait for, well, a pullback because you're unsure if you can read the setup in the moment, then wait for exactly that and execute those trend-following trades calmly. What do I mean by that? I'd like to show you. For example, you could go ahead and buy proactively here if you see something in the order book, and so on. But you could also say, I'll wait until the market moves up again and shows me that it's building liquidity to the upside. And then you can go ahead and say, for instance, something like, I'll place a buy limit order just above the last area of liquidity that developed on the way up. I'm placing my stop loss here because this is where I expect the market to do the opposite, and I'll let the market decide for me. If it runs here, I'll be taken out, and up here I have a very clear predefined price range where I'll take my profit. These are different approaches for different trading personalities, and that is incredibly valuable. This means you should look at what you like best, what suits you the most. Some people just love trends, they want to play the trends, while others prefer the counter movements. And the core message behind it is: many traders don't fail because of their technique, but precisely because they're trading a strategy that simply doesn't suit them, which causes a lot of uncertainty, and that's a huge problem. Discipline doesn't come from willpower. Many people believe, I just have to work more disciplined, but that's actually usually wrong. Discipline always arises when you have very clear rules, when you have very clear routines on how to follow those rules, that you've prepared yourself perfectly. And, and this is very important, that you establish the right metrics for your strategy to know after 197 trades, is what I'm doing here really strategically sound? And secondly, Have I found confidence through it? And do I feel comfortable with it? Professionals don't rely on "I'll motivate myself," but on a very clear system that they were able to develop through mathematical metrics. And the last point, I can promise you, is a real game changer. Anyone who acts without discipline in the markets will always, inevitably, be in a position where, in the long run, they will simply end up paying money into the markets. Because regardless of whether you prepare poorly, whether you feel uncomfortable, or are even lazy and don't keep a trading journal, which should also include, how did I feel during it? And am I exhausted after trading, or am I actually still feeling strong? Then you know you're at the point where you have a reproducible strategy that also matches your skills. And that's the reason why we use the Trader DNA methodology to pre-select which strategy fits which trading personalities. And that way, you save yourself a huge amount of time. And these are the parts that simply lead to you being able to achieve performance much faster if you implement the strategy behind it with a positive expected value, which is the basic requirement, in a disciplined way. I hope you enjoyed it and that it was able to clear up a few more of those question marks for you. Thank you very much for your time.