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Again: Psychology is the most powerful force that moves markets. My shortcut, sound-bite way to say this is: "Mind moves the market." |
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It is our belief about what is happening right now that shapes our immediate actions, not necessarily what is actually happening. |
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And it is how we imagine the future will be (based on the past and the present) that also shapes our actionsnot necessarily how the future actually turns out to be. |
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We will look at the following basic psychological issues that are relevant to online traders: |
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Identifying what type of investor you are. Do you have the personality type and temperament that can tolerate watching market swings very closely? What is your approach to online trading? How frequently and with what scope do you want to trade? |
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Balancing the opposite forces of greed (reaching out, risk taking, letting gains run) and fear (withdrawing or staying neutral, defensive, taking profits, cutting losses). Finding the balance that is right for you. |
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Balancing the isolation of trading on your own at home or the office with the large amount of information available through the media. How to trust your own analysis when so many sources of information want to shape your opinion and your actions. How to use the available information without becoming overwhelmed by it. |
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Balancing active and yielding forms of self-control, and understanding how to apply each of them, according to your needs and the market conditions. |
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Confronting the fear of taking decisive action; dealing with trader's block. Or: "Don't just sit there, do something!" |
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Confronting the fear of doing nothing. Knowing when it's time to sit back and watch, taking no action. Or: "Don't just do something, sit there!" |
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Understanding and applying the difference between perfectionistic thinking and trading excellence. |
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Balancing short-, medium-, and long-term thinking and developing a frame of reference to understand your own trading moves. Understanding the concepts of how short-term |
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