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Trading psychology | TbinaryOptions
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Trading psychology

The most important thing in trading activity is mental trader’s attitude. Suffice it to say that the traders which are trading virtual account (with virtual money) often show good results, but in the transition to real money their results are highly degraded. What’s the matter? The same trader, the same quotes, the same tools used – but there is such a different result. The answer is simple – psychological factor effect. Working with real funds, the trader is most strongly dependent on his own feelings of fear and greed, which is also called the motor of the market. These two often opposing sensations do not give a trader calmly and soberly assess the situation, timely closure of loss-making positions or take profits.

The panic in the market leads to sharp changes in exchange rates and very often such a move does not reflect actual processes that occur in a particular economy of the world. It is appropriate to recall the definition of “collective intelligence”: the mind of the crowd equals the mind of most underdeveloped representative of the crowd. When we are talking about a large number of traders from private individuals and various investment funds, financial houses, banks, the total mood of the crowd often exposed to a mood of panic despite the logical reasoning of savvy trader. If we would understand general mental attitude, the success of our trade will increase dramatically.

It is much more difficult to rein in your own mental attitude at the time of making a decision to buy or sell currency. When making a decision, beginning trader has on one side of the balance is intuition, fueled by emotions, on the other side – unbiased knowledge, devoid of emotional state and based only on facts and objectivity. Which of them does outweigh? Of course, intuition! But intuition of a beginner is not based on experience.

As a result, the decision is made on emotions – the main enemy and assistant of the trader. How the trader can learn to regulate his emotions or to minimize their impact when emotions are prevented? The answer is to improve the discipline of the trader. Only disciplined trader will be able to operate on the market as much time as necessary to achieve the goal. Only the discipline will not allow the trader to be broken under the influence of the market and out from the market. There are lots of ways to work on trader’s discipline strengthening. Among them are measured schedule, the choice of time frame to work on the basis of psychological characteristics. But the most effective way is to use the trading system.

Following the signals of the trading system is not quite easy also. The trader should understand that the situation for the right moment to enter the market will always be repeated until the market is alive. But many traders are succumbing to the temptation to have time to jump into the passing train and entering the market too early or too late, which inevitably leads to losses and psychological disorders. The work with financial instruments is not easy primarily because of the strong negative impact of failures on the psychological state of the trader.

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