Trading is complex and to many an endeavour that can make or break their life investments. However, not everyone can trade. It requires preparation, emotion, and, more importantly, a psychology. Combining charts, financial instruments and several risk management factors, successful trade above all requires technical knowledge. While grasping the intricacies of trading, you must understand your unique trading psychology that forms the crux of your decision-making process.
The inner struggle
Fear and greed are among the biggest drivers of emotion – they can easily cloud any sane trader’s judgement and disrupt rationality, which is extremely important in trading. If fear paralyzes you, preventing you from taking crucial risks, then greed can make you impulsive. Bottom line – all trading involves risks, and it is with risk that you can gather the desired profits. Here are some of the most common psychological factors that can affect your trading psyche –
FOMO
Otherwise called the Fear Of Missing Out, this is one of the most common emotions that affects traders at every level. Most traders fear missing out on a lucrative deal and succumb to FOMO, leading to impulsive trading.
Going where the herd goes
It is a natural tendency to follow the crowd, especially during market volatility, because greed often tells you to enter or exit positions that others take without any research or analysis. Herd mentality can lead you to exiting prematurely or entering at the wrong time.
Ignoring stop-loss
You might end up ignoring predetermined stop prices or exit points when you fear that you might realize a loss. Hang on to it, and you could incur greater losses, especially when the position moves against you. Significant financial setbacks become inevitable when you are reluctant to accept even the most minor loss.
Triggering too early
Some traders pull the trigger too early on profitable trades; others exit prematurely due to a lack of patience. Potential gains are hindered by the fear of giving back profits, creating a cycle of missed opportunities.
Understanding trading with MMM
Mithun’s Money Market simplifies trading while honing your psychology and helping you fully comprehend the strategy. Learn how to move within the markets with MMM, where uncertainty turns to opportunity in the face of what might seem adverse but really isn’t.
FAQs
Traders are compelled to engage in impulsive trading without conducting proper analysis due to FOMO, or Fear Of Missing Out.
Speak to experts at Mithun’s Money Market to guide you. They will provide you with the most comprehensive training that will equip you to trade appropriately.
Of course. You must be calm and composed so that you can handle the risk and loss for a future gain or profit. This is what MMM teaches you.
We don’t just strengthen your technical understanding; we also educate you on the psychology of money and trading so that you are not flustered by minor losses or too elated by significant gains.
Traders often ignore stop losses out of fear of realizing losses. You must enter and exit at the right point to minimize financial damage.