Psychology of Trader

24 December 2024

Trading Psychology Simply refers to the feelings and emotions of an experience and the associated trader takes an important in trader actions as a result. Psychology is critical in our life even in professionals and investment also depends on it. Most traders only use trading strategy but 80% of trading IS depends on psychology

 

Common emotions that traders experience:

Traders Typically experience a multitude of emotions during their trading Journeys. But broadly these can be categorized as follows:

 

Fear

As a Trader you may make a trade anticipating that the market will move in a particular direction However, there is a possibility that the trade takes a different direction. This might lead to Fear of loss set in. if you are unable to keep your emotions in check. then you might end up taking a wrong decision in the spur of the moment. Fear and anxiety can lead to wrong decisions such as: 
- avoiding a trade altogether fearing it could prove to be wrong.
-Holding on to a losing deal and letting the losses multiply.
-Panic Selling motivated by Concern over losing money, etc.
A Genius is a man who can do the average thing when everyone else around him is losing his mind"
- Napoleon.

 

Greed

Greed is another Primary emotion that can cause severe losses. A trader enters the market with the idea of making a profit Hence if the market Conditions favour the trader's entry analysis and meet or exceed expectations, why and should they exit from such trades. This is where greed comes into play, especially in bullish markets. Greed may be defined as an overwhelming desire for income that at times, interferes 'Substantially with reason and Judgement. "A greedy trader will be an exceptional optimist and throw their risk management system out the window to hold on to their position that is in green for a longer than pretend

 

Regret

Naturally, some well-thought-out trades will not pan out as they may expected. But there may also be times when you are unsure of what to expect and yet make trades to keep pace with a trending stock or Simply due to fear of missing out (FOMO) on Some Popular Stock. These trades can lead to regret. Remember to make a mental note of such situations so that you can avoid the same mistake In future.
 

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