The trader's psychology is an important part of comprehension of the world market, which is often ignored by exchange participants.
The trader's psychology is an important part of comprehension of the world market, which is often ignored by exchange participants. Focusing on the technical side of making deals, a trader can forget about proper psychological preparation. Today we will consider the importance of this science and tell you about common mental traps.
Why should a trader study psychology?
When starting a career of a stock speculator, a person most often pays attention to trading strategies and basic terms. This approach is not meaningless, but if a speculator omits important psychological aspects, he will continue to lose money for no apparent reason. In order to learn high-quality trading on the world market, a trader should study the key features of human behavior.
By mastering psychology, the player will be able to understand himself and understand the meaning of other people's actions. Practice shows that pricing depends not only on objective factors and news reports, but also on human reaction to them. By building assumptions about the internal state of stock traders, a market participant can make a clear assumption about the movement of rates.
One more important aspect of trader psychology is self-control. Acting on the international market, a speculator feels intense stress because of constant risk. When making a mistake, a person can lose a large sum, and fears, doubts and false hopes appear. All these emotions have a significant impact on the final trading result. Under the influence of strong feelings a person can make a mistake, which will contribute to the rapid drain of capital.
The trader's psychology teaches understanding own emotions and helps to control them better. Using special techniques, an individual will learn to stay calm and make informed decisions even in stressful situations. By choosing the optimal psychological techniques, he or she will achieve inner harmony and will be able to trade successfully, while experiencing real satisfaction. Forex psychology.
Mental traps in trader psychology
Cognitive distortions are characteristic of absolutely all people. Being under the influence of strong emotions or other people's judgments, we often make mistakes. In trading, such mistakes can be really fatal. By making a mistake in forecasting prices or developing a unique strategy of behavior, a speculator will lose his or her chance to get rich and lose the invested financial resources.
To avoid common mistakes, a beginner should pay attention to the traps in trader psychology:
"All brokers are crooks!" - this cognitive distortion appears when a novice trader refuses a long search for a bona fide firm and has not transferred funds to the deposit of the first found company. As a rule, this group of exchange players prefers the shortest way and starts market speculations without proper preparation. As a result, their deposit is concealed in front of their eyes. Not willing to admit their own mistakes, the person calls all brokers cheaters. Trader's psychology
Trading brings super profits - wishing to quickly get rich on the price difference, a beginner makes large bets and quickly merges the deposit. In a network it is possible to meet a huge quantity of advertising from unfair brokers who promise on 100 % of profit monthly. In practice, it turns out that such firms take away the finances of customers without providing any trading services. Unfair exchange intermediaries warn in advance about potential risks. As a rule, the profitability of beginners in the world market is only 3-5% per month. With correct work, a trader can increase his earnings after acquiring trading skills.
"Quit working for your uncle!" - Many people associate trading with gaining financial freedom. In some cases, stock speculators really do succeed and make trading the only source of their earnings, but not every player can do it. If a person does not have large savings and a good airbag, he or she will have to continue the standard work while learning the basics of trading. At first, stock trading brings extremely scarce earnings, which is not enough to support a family.
Addiction can develop not only from cigarettes, drugs or alcohol. Modern people often find themselves in a difficult situation due to unhealthy craving for computer or gambling. Taking trading as a fascinating activity, a person risks getting a real addiction. After a time, a trader will form an emotional attachment to the excitement that he or she feels while making bets. Thus, a perspective trader can quickly turn into an addicted person.
"The robot will solve everything!" - not wanting to undergo a long training, a modern trader can buy a special program to automate trading. A computer system makes trades independently, while a person only needs to run it. Technical progress has greatly simplified the life of an ordinary speculator, but this innovation has its downside. A robot cannot analyze the news and emotional background of stock market players, so it misses important information and often makes mistakes in forecasts. In addition, there are cheaters who sell completely useless systems under the guise of quality programs.
Tracking these cognitive distortions, a trader can avoid many mistakes and achieve success on the world market!