As an educator working with traders of all levels of ability, I am always struck by how little most traders really concern themselves with the issue of market psychology and their own personal trading psychology. In my opinion, this is the single most significant part of a winning approach and no trader can reach his or her full potential without a sound understanding of market psychology and their own psychology.

For example, I work regularly with traders who have very well-thought out methods of analyzing markets and very carefully select their positions. They have back-tested their approach and have a high degree of confidence in what they uncover with their system - but lack the ability to "pull the trigger" at the best execution spot. They can show me very precisely why a market had potential to move in a particular direction and often have uncovered a significant turning point that may last for weeks in some cases - but they have missed the best point to execute for no other reason than they were afraid of taking the risk at that particular moment.

Often, these same traders feel a strong sense of anxiety once they finally take a position or "kick themselves" for missing the perfect place to trade. In the long run, although they have a solid method of finding opportunity, their participation is fraught with emotional turmoil.

What is the problem here?
In my view, the problem is a lack of personal understanding or acceptance about what trading really is and a lack of understanding of underlying market structure.

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