Psychology of trade has become so widely discussed and promoted through books and consultants who has become a convenient rationalization and the excuse for losing. Why take responsibility for a lack of work ethic and trade without any concept plan, an honest assessment that would be a 'hit' on the self-esteem of the trader - when you can blame on trading psychology instead?
Psychology of trade is 'something' that a merchant creates from the personality traits that are not initially related to trade, but the surface of trade without understanding method. Of course, the result is afraid, but this would be the case when doing something that was perceived as 'dangerous' and made the necessary understanding and skills? Trade, with its inherent characteristic accept financial risk while participating in the results of the unknown, is certainly 'dangerous' and so prepare more and understand that it is needed.
Commercial stage
Consider the possibility of the a business plan that has the following three types of settings: (1) initial intention to trade continued (2) the first entry that is used to enter a trade should have been their initial entry, or decided that he wanted more confirmation because he was a counter sales management (3) second continuation which pretends to be a trade addon Setup program, but is also a 'final' opportunity to enter a trade.
You'll get an initial sale that triggers installation but do not carry trade = trade1. Trade breaks cleanly and goes to what would have resulted in a partial benefit, and, then, before the price goes beyond, rescues the area where the sale was made. This price is kept well swing remains this waiting for what is now resistance and short, you get trigger settings first resumed but do not take this good trade = trade2. Why not was trade adopted? You decide for losing the initial entry, who have lost trade; biases and your emotions tell you that the movement has gone too far. Once again, this trade breaks cleanly, not only add to the benefits of trade1, but also giving a partial benefit in trade2.
Price now consolidates casualties and price if normally used to stay short if it had taken initial trade or first trade continued resistance. Instead of investing swing to consolidate, continues towards down once more and this continued their triggers second installation of continuation = trade3. AND AGAIN - don't take trade. All in all, if you do not take any of the first two trades, how can you possibly taken this trade? Maybe it was wrong when thought transfer had gone too far to take trade2, but certainly is the case with trader3.
Like trade1, and trade2 trade3 is a profitable trade. This twist has really become a large directional movement, with each hop clinging blow weak - a classic example of the strengths of your business method, but has never entered a trade. You're nuts! Listen in this cursed swing - simply cannot take it over. Another return remains a high bottom. You do not have a configuration entry, but that doesn't matter, the other three trades were profitable after a high bottom. The same emotions that do not allow to introduce his plan offices, are now forcing '' take a non-plan trade isn't as interesting.
Rather than its trade to a lower level and a benefit, instead goes to a higher low, and then buy the initial setbacks. Ill just what is worse, also does not exit when the swing shop. After what happened to finally enter the trade, you have to try and make it work and once all the trend is down - right? TraderA uses this initial purchase to exit its profitable to sell and sell addon; decide that they want more reverse swing confirmation before the direction of trade counter. Activates a first installation of continuation van long, has reversed the swing and this trade reaches its first profit target.
Finally, TraderB 'cedes' and leaves their shorts with a colon instead of the expected loss point, without any consideration to take his next plan trade, buy the continuation of the first. This merchant is done during the day, but at least 'right' were all the time; swing had gone too far to go and had been justified fears - it's a losing trade that they should not enter.
Is this a method of trade or Commerce psychology issue? What 'message' is to take what happened TraderB.? Will take the attitude that no should be criticized, simply not trading due to the psychology of trading? Or recognize the method won, the resulting loss was not a trading method, and even, the loss would have been compensated by previous winners. Recognized that they did their worst fears come true and not only this became a losing trade, also increased size of that loss, and then to avoid another method winning trade.
Granted, psychology was involved with what has happened in the commercial scenario described, but that is a function of the personality of 'core' of the person and would probably be a matter regardless of what was done; If there is 'risk', there will be an 'emotional' response. It is therefore necessary first to separate personal psychology from trading psychology and the use of this concept as an excuse for commercial actions. Then, if trading psychology will be controlled, this will be done on the preparation and implementation of a proven plan that the trader is willing to continue. Not trading with 'integrated' excuses for failing, will have lost before and will continue with a continuous 'snowballing' emotion to the extent that trade because it will not be possible.
Barry Lutz has been trading as well as teach others to trade since 1997, from his firm Trading, LLC., http://www.tactrade.com tactician. He also writes a daily trade teaching lesson called trade, found, along with other resources in trade and Commerce method in the tactical Trader Psychology Journal [http://www.tactrading.com].
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