Trading Psychology

Trading Psychology

The most important point in trading activity is the psychological mood of the trader. Suffice it to say that traders are selling a virtual account (with virtual money) often show good results, but the transition to real money their results strongly deteriorate. What's the matter? The same trader, same quotes, same tools used - and such a different result. The answer is simple - in action and psychological factors. Working with real financial resources, the trader is most heavily dependent on their own feelings of fear and greed, which is also called engine market. These two often opposing feelings do not give the trader to calmly and rationally assess the situation, timely closure of unprofitable positions or fixed income.

Lars Tweed

Psychology of Finance

The Psychology of Finance

Panic in the market leads to sharp changes in exchange rates and very often this movement does not reflect the real processes occurring in a particular economy in the world. It is appropriate to recall the definition of "collective intelligence": the mind of the crowd is the mind of the underdeveloped representative of the crowd. And when it comes to large numbers of traders from both private individuals and various investment funds, finance houses, banks, the total mood of the crowd are often exposed to panic despite the logical arguments sober trader. And if we will understand the general psychological mood, that the success of our trade will increase sharply.

But while there was "collective psychological mood. And if you want to see, understand and use the general attitude to personal trading, it is possible to carry out, watching the market reaction to events in world politics, economy and nature. It is much harder to rein in their own psychological disposition at the time the decision to buy or sell currencies. The decision at the beginning trader on one side - the weights is intuition, fueled by emotion, on the other side unbiased knowledge, devoid of emotional disposition, relying only on facts and objectivity. What outweigh? Of course, the intuition! But intuition is not a beginner is based on experience.

Alexander Elder

How to play and win at the stock exchange.

Psychology. Technical Analysis.

Capital controls

Trading for Living:

Psychology.

Trading Tactics.

Money Management

Consequently, the decision is made on the emotions - the main enemy and assistant trader. How to learn to regulate their emotions, to minimize their impact when they are prevented? The answer - to improve the discipline of the trader. Just a disciplined trader can operate in the market as much time as necessary to achieve the goal. Only discipline will not allow the trader to break down under the influence of the market and leave the market early. There are many ways to work to strengthen the discipline of a trader - is measured and schedule, and the timing of the frames for the work based on their psychological characteristics ... But the most effective yet is the use of the trading system.

Follow signals trading system also fairly easy. This requires a good understanding of that situation for the right moment to enter the market will always and will be repeated until the "live" market. But many traders, succumbing to the temptation "to have time to jump into the departing train, part of the market either too early or too late, that inevitably leads to losses, and to a psychological disorder. Working with financial instruments is not easy, primarily due to strong negative impact of failures on the psychological state of a trader at heart at the loss of money in a failed transaction and subject to continuous psychological pressure.

May surprise you, but on the psychological condition can negatively affect and win, when the trader, successfully entered the market, closing the position at a profit. In this case, the risk may be related to the revaluation of its commercial properties and decreased attention. Calling the result of winning, we deliberately draw the reader's attention to this perception of earnings as a result of the last transaction with a profit a trader is often perceived as the amount earned while on earnings, we can only speak as a result of multiple transactions, say, a month or longer period. Then the results are all positive transactions are averaged, and we're talking about the average of positive transaction and the total profit. The results of all the negative transactions and averaged - get average loss, and in addition to it - an indicator of the overall loss. The total income minus total loss of earnings over a certain period of time, and we equate to earnings. If the trader will operate primarily concepts associated with the overall performance, rather than appealing to the short-term gain, such an approach would reduce the psychological pressure as a result of each completed transaction, "averaging out" the impact on a large time period, month or quarter.