What is Psychology ? and How to Emotional Control In Trading Market

What is Psychology ? and How to Emotional Control In Trading Market

Psychology in the Trading Market


   Trading Psychology    

What is market psychology in this article we will explore the importance of psychology in the market?

Psychology in the Trading Market
Psychology in the Trading Market

   Market Psychology refers to the manner in which the market reflects its participants collective emotional state most traders have never thought that human psychology could be a fundamental key for a successful trading life trading is not based solely on the level of expertise in technical or fundamental analysis trader psychology plays a fundamental role for a trader to become successful.
Several researchers have presented the link between psychological factors and trading performance there is actually no way to remove the psychological factor from our trading other than to work on our self-control.


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     How Market Psychology Works     
How Market Psychology Works


Let's explain however how market psychology works markets participants understanding and sense of the markets can and very often do guide assets price in a direction inconsistent with fundamentals the nature of market psychology suggests that any given trend may be more indicative of market sentiment than fundamental gains or losses in the value of assets.
Market psychology reflects to the overall, feeling in the markets that urge traders to buy or sell this explains the arguments that an upwards trend is captured by positive feelings by an optimistic view of the market on the flip side fear correlates with a downwards trend the rollercoaster of emotions that the majority of market participants face as the market fluctuates is consistent by with the various stages of trading psychology as the markets go through their ups and downs investors are confronted by various challenges initially there is the feeling of disbelief for the start of a trend hope is next for potential recovery of the market optimism follows thinking that the rally might be real and then belief thrill and euphoria which most of the time is triggered by greediness however that's not the end of human psychology when the market has reached its peak and started forming its way downwards different feelings appear as the market forms firstly is complacency investors are trying to convince themselves that this is just a period of serenity before the next rally as the market continues its way down though anxiety persists followed by denial that price will revert higher again once the realities of a bear market come to the forefront panic dominates many withdraw everything from the market afraid of losing what's left capitalization anger and depression drift the market at its bottoms.



        How to Emotional Control In Trading Market        


 Emotional Control Now we will explore the importance of psychology in the market trading is predominantly a psychological business and it is important as a trader to know yourself an old cliche is that emotions kill good trading
so the ability to manage your emotions is vital emotions ego and the need to be right play a huge part in trading.

Fear Greed Hope and Regret are the four key Emotions a Trader

How to Emotional Control In Trading MarketTrader you cannot completely get rid of fear and greed but you must learn to manage them fear and greed at different sites of the same trading coin and you must learn to treat them both the same never get too greedy and never get too fearful a trader has three key fears to deal with the fear of losing the fear of missing out and the fear of a lost profit as for hope and regret traders must rights and never trade in hope or ever regret the outcome of a trade a trade has only three possible outcomes it ends as a winner as a loser or breaks even by minimizing risk traders can minimize the emotions and stress of trading if a trader is only going to lose 1% of their capital on any one trade each and every time they then lose the risk of ruin and the risk of account wipeout is greatly reduced it would take 70 consecutive losing trades to lose 50% of a trading account if each and every trade was to lose just 1% the problem is that most traders risk much more than 1% of their account on a losing trade and quickly end up revenge trading risking more and more to get even or blow it all on one last big cannot fail trade the market is always right and the market only goes up down or sideways how a trader deals with the emotions of winning and losing is a key and vital ingredients all traders must strive to achieve.