InPsyghts

Trading is basically an act of buying and selling of financial products through trading platform. These platforms are generally provided by brokers and it is open to  everyone who is interested in making money from the market.

Psychology is one of the essential elements of technical analysis with the integration of mathematics and analytics. Psychological study helps us understand individual’s personality and sentiment. It help us in understanding how an individual’s emotion, prediction and behavior as to what makes them to do so.

One of the key factor why technical prediction works is human behavior and sentiment towards market remain unchanged regardless of time. An individual entered the market way long back with mixed emotions such as greed and fear and the same trend continues.

Trading psychology is very essential as other factors matter which are observation, understanding and tactful in becoming successful trader. Whilst decision making during the trade, sentiment towards the market always deviates from sticking to a plan. It is very difficult to fight against these mixed emotions and win over it. However, one can understand the spectrum of mixed emotions going through as a trader and how it targets our action towards market. Selfish, Panic, belief, joy are some of the common type of emotions displayed by a trader. To be successful trader one need to manage and win over these emotions and keep it under control.

A trader tends to concentrate more on news, particularly when he start his journey as a day trader. Trading is all about winning and losing in which you can make a fortune out a trade or you may lose fortune. Here one thing a trader should very keenly observe is, a wrong trade is labeled as loss and right trade is labeled as win. Majority of us only focus on more win than giving a thought about loss and attempting to trade in this manner may lead to more losses.

An Amateur trader notices that he/she do not end up winning all trades. Traders can enter into market anytime by placing a bulk buy or sell order creating a buzz in the market and pressing down to save our trade by applying stop loss. One can’t have a hold on this and this is part and parcel of trading. Then too majority of the traders gets distracted with the lost trade and keep trying to find a solution for this but that shouldn’t be the case. Most of them rely on news, tips, charts and analysis and go in search of predicting accurate movement of market but unfortunately market is not so disciplined and organized. Not necessarily you need to be correct all time to make good money. At least if an individual focus on 50% to 60% as success percentage, it is more than sufficient to get humongous returns.

Planning to beat market every time is pointless goal, which in turn will keep your thoughts roam around and make you over estimate the market leading to very bad outcome.

When we trade, outcomes are unpredictable to some levels. However, with a disciplined strategy in place, we notice that for every 50 trades, we are rewarded with profit in at least 30 trades which gives a decent 60% success ratio and it is convincing enough to prove your strategy works, whereas we wouldn’t know in which trade we can book profit and which may go loss. Though we know from our strategy we will have 6 successful trade for every 10 trade we make and this judgment is completely in the control of market as to which trade win and which trade loss and it is not decided by us.

An individual needs to be firm with his strategy and shouldn’t deviate from it. Despite being a loss trade, it was very much anticipated to happen and just need to wait for the winning trade by being consistent and with emotionally balanced approach towards market.