Trading Psychology Glossary
Key mental concepts every crypto trader must understand
This glossary explains the most important psychological concepts in trading. These terms are not theory — they describe the mental forces that shape decision-making under uncertainty.
Probability Thinking
Probability thinking is the ability to judge trades as part of a series, not as isolated events. It allows traders to remain emotionally stable despite short-term losses or wins.
Traders who lack probability thinking tend to overreact to single outcomes.
Discipline
Discipline in trading is not willpower. It is a system of rules that prevents emotional decisions before they happen.
True discipline is built into the process, not forced moment by moment.
Emotional Regulation
Emotional regulation is the ability to notice emotions without acting on them. Fear, excitement, and frustration will always exist in trading.
Regulated traders allow emotions to pass without changing their execution.
Overtrading
Overtrading occurs when trades are taken without valid setups, often due to boredom, frustration, or the desire to recover losses quickly.
Overtrading is a psychological problem, not a strategy problem.
Revenge Trading
Revenge trading happens when a trader tries to immediately win back a loss. It is driven by ego and emotional discomfort rather than logic.
This behavior usually increases losses instead of recovering them.
Loss Aversion
Loss aversion is the tendency to feel losses more strongly than gains. Traders affected by loss aversion may hold losing trades too long or exit winners too early.
Understanding loss aversion helps traders accept normal drawdowns.
Ego in Trading
Ego in trading appears when results become linked to self-worth. Wins feel validating, and losses feel personal.
Professional traders detach identity from outcomes and focus on execution.
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