It’s important to maintain your attention on the trade you have placed. You must be ready to quickly take action to protect yourself when you can clearly see the signals that the market is moving against you. However, psychological problems like self-doubt, shaky confidence, or a lack of dedication might divert you. They might affect your capacity to easily carry out your trading strategy and handle a trade. It’s helpful to try to resolve as many psychological conflicts as you can, even though it’s practically impossible to eradicate all psychological conflicts from your psyche. This will prevent psychological conflicts from penetrating your consciousness and interfering with your ability to concentrate on your trade.

It’s best to deal with psychological conflicts as soon as possible because if you don’t, they just linger in the background of your mind and consume precious, finite psychological energy. You can lessen the likelihood that psychological problems will enter your consciousness when you least expect them by identifying them before the trading day. Do you harbour any unsolved disputes in the back of your head? It’s challenging to simply ignore these disagreements entirely and carry on as if nothing ever happened. Ironically, the more psychological energy you expend trying to deny that these problems really exist. It’s better to acknowledge and deal with disputes than to try to ignore them.

Many people find it natural to follow the herd. It often works in our favour. It’s in our best interest to find out why none of our wealthy friends reside on the west side of town, or to just move to the east side and blend in. But when it comes to trading, this way of thinking must be abandoned. You must develop the ability to predict what the mob will do next and learn to act independently before waiting to follow them. The main activity in trading is the short-term purchase and sale of equities for financial gain. If you are going with the flow, it is difficult to do that.

When buying a significant quantity of stock with the intention of selling it when the price rises a few points, you can’t wait for the general public to back up your predictions. Costs fluctuate in cycles. You risk trying to sell as the cycle brings the price back down if you wait too long for the price to hit a peak and for the market to buy a significant number of stock, validating your forecast. And by that time, the purchasing frenzy has passed, and you are probably trying to sell your stock when “fear” has set in and the majority of people are prepared to do so.

Ideally, you should buy stock when the public is going to embark on a buying spree, buy it at a lower price than they will gladly pay, and sell it to them then. You need to be the first person in line prepared to sell when everyone else is waiting in a different queue to buy. You must anticipate the next vogue and behave differently from the majority of people. In terms of realistic strategies, that is more challenging to put into practise.

To foresee the pivot points, for instance, you need precise momentum indicators. But psychologically speaking, one must also be willing to discard the lessons we have received throughout our lives about finding shelter by doing as others do. There is no safety in numbers in this situation. When it comes to trading, you must see the crowd as your rival rather than an ally. You must foresee what they will do and devise a strategy to profit from their anxiety and desire.

Remember that after the California Gold Rush, San Francisco’s mansions were not constructed by mining for rich metals but rather by providing food and other amenities to the large number of inexperienced miners looking to sate their greed. You must equally take advantage of the crowd and profit from their “herd mentality” as a trader. You must be the first to devise a plan to capitalise on their fear and greed to amass your wealth.