Perhaps the most important, yet overlooked, aspect of investing is psychology.  Ed Seykota, one of the most successful traders of all time, once said "we all get what we want out of life."  If we really want to be successful we will, if we really want to fail we will.  Therefore, it is important to work on ourselves and understand why we do the things we do.  If you are someone who sabotages yourself, you need to find out why, deal with it and make sure it does not lead to financial ruin. 

 

Often the main problem hinges on discipline.  This may sound simple but it isn't.  You should always go into a trade or investment with a complete plan.  What to buy/sell, how much, what your maximum loss is, etc.  The problem is sticking with your plan because perhaps the easist thing to do in trading or investing is to disregard your plan - primarily your maximum loss and hold on to a losing position.  If you had a short term time frame for the trade, now you tell yourself i'll just hold the stock.  When it recovers to "x" price I'll get out.  When the stock keeps dropping you convince yourself the bottom is in sight, I'll hold on just a little longer.  But then the stock drops more and finally you can't take the pain anymore.  You sell at a big loss.  Do not fret, this happens to everyone.  Anyone who says otherwise is lying.

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The key is forging your discipline.  But if you have some underlying, unresolved issue that subconciously causes you to fail, staying disciplined will be almost impossible.

 

Another common occurrence is once you have lost money, you bury your head in the sand.  You tell yourself you were never really cut out for this after all.  Then as sure as night follows day, the markets recover.  Unfortunately, with your head in the sand, you've missed a tremendous opportunity to make money.

 

To make money trading and investing you must either get control of your emotions or admit you cannot control them and set up a process that takes key decision-making tasks out of your hands.  

 

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