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Psychology of the trading


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#1 ⇑ Haut ⇑ 10-02-2009 17:16:25

Bruno
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Psychology of the trading

To my mind, I think behavioral finance plays an important role in the markets. All players are subject to their emotions, including two that seem to be the basis of each decision: fear and greed.

Everyone is indeed afraid of losing, although everyone reacts differently to each situation. That's why most people are struggling to cut their position when they lost even if their strategy was fixed in advance. It is often said "it will go up" or "I leave I would see how that evolves" and that is often the best way to lose a lot more! It is for me the reason for the downfall of certain individuals who have failed to be disciplined enough to meet their trading plan. You need to know when to cut one hand sometimes ... Obviously this is not the only factor but one of the key anyway.

Another important factor seems to be greed. A lot of people still believes that a single trade can make them rich. The market is never only up or down. The problem is that once reached a certain level of profit, if the price makes a reversal then, we often expected that the price get back to its highest or its lowest before deciding to close its position. Again it is a serious mistake. We must adapt according to the evolution of the trade and that's why it is always better to function with a moving stop. Thus we can take advantage of the movement and be sure to win at the end (of course if the price went to the right side at the beginning ..). Whether you don't do it, the trade often ends up with loss because we do not sell until the price returned to the desired point (which is not often the case ..) and a trade which started with profit, become a losing trade.

That seemed me important to talk about that

Tell me what you think




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#2 ⇑ Haut ⇑ 17-06-2009 10:29:41

lancehibner
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Re: Psychology of the trading

Trading psychology is ‘something’ that a trader creates from existing personality traits that are not initially related to trading. Trading psychology has become so widely discussed and promoted through books and consultants that it has become a very convenient rationalization and excuse for losing. Trading is much more of a psychological problem then a methodological one, only the traders who have first accepted this have a chance of being consistently successful traders. Trading psychology can affect your judgment while you are trading.




 

#3 ⇑ Haut ⇑ 16-12-2012 06:23:47

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Re: Psychology of the trading

Psychology of trading, a trader will affect them, including the emotions .. A trader can not control your emotions, not be able to think clearly and rationally, so they quickly get a margin call...




 

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