Greed, hope and fear on Forex

13. The psychology of a trader

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Many believe that the Forex trading game. This is partly true, but unlike the game of Forex trading is a real opportunity to earn a living. Investments in the currency market do not require deep mathematical knowledge, but in Analytics trader should understand. One of the most important abilities - the ability to interpret the news.

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The initial contribution that would be needed to get started in Forex (despite all the stories, wandering in the Network) is very small. First, you will have the opportunity to trade, to thoroughly examine all the rules and nuances of the market even without any investment (with the help of the demo account no Deposit or Forex accounts). In addition, the Forex market does not have to fear crises and sharp falls. Disaster that make of the enterprising and intelligent millionaire bankrupt, peculiar only to the stock market.
Consider the basic phenomenon in psychology exchange game: thirst, the hope and expectation and fear. These phenomena are devoted to the pages of the book of E. L. Nyman the trader's Small encyclopedia. Mainly this book focuses on the basics of technical and fundamental analysis of financial markets. Small encyclopedia is intended more for the experienced professional participant of the securities market, foreign exchange market and exchange commodity markets. But for the novice trader is to this edition provides a practical material, based on the study of which you can learn in financial markets law and psychology exchange game. In this section, we will briefly touch upon the main points of psychology exchange game, each individually, based on this Nijman classification. Those who want to fully explore this area, I refer directly to his work.

the Driving force which causes the trader to participate in the work on speculative financial markets Nyman believes greed. If your greed is negligible, then deals you'll make a little, constantly losing favorable cases. Then the trader is recommended to pursue other kind of business, more calm. If greed has no limits, then the trader tries to achieve the sale, putting them at risk of uncertain prospects. Then it is better to play at the casino, we discussed this in the beginning of the Chapter.

In the first case the trader's work reminds jumping cowardly hare, gently pop-up from behind a Bush. In the second - passion reckless slayers in a horse-drawn battle. The end - death: from a predator or a stray bullet. Transcribed trader from an experienced trader or from a big loss. Greed must be held on a short leash. The main thing is that it does not interfere with decisions at the conclusion of transactions. The result of greed is the motivation to conduct transactions.

there are two types of motivation. Rational motivation is usually present to the first occurrence in the market of a young trader, as well as in the work of a professional trader. It is expressed in the cold prudence in making decisions on conclusion of transactions. Irrational motivation is expressed in the player's excitement and is present in almost every trader, however, professionals control their passion, and non-professionals become slaves of emotions and doom themselves to failure. Identify, under the influence of passion you play, you can use the following signals. If a trader asks the other: What do you think about this? and tells others about his open positions, if a trader does not have a plan drawn up before the conclusion of transactions - this person works under the influence of irrational greed, not reason. The best cure for gambling is transaction plan and financial plan of activities.

the Hope of profit
As a factor motivating trader and active work is the hope of making a profit. The meaning of a work is in making money. However, if hope prevails over expectation, you run the risk of overestimating your own capabilities in the analysis of a situation. Hope considers Naiman, must be subordinated respect to the calculation of greed. Great expectations lead beginners to ruin.

Hope determines the behavior of traders in two cases. At the time of entry into the market hope of making a profit may cause a person to commit a specific action on the financial market. At the time of receipt of losses hope is 3 stage of development. At first, when the losses are still insignificant, hope is inevitable and in some measure may be justified (if you are confident in their actions and act in accordance with the adopted plan). At the second stage, with the further growth of losses hope dates back to the peak. At this point trader difficult to separate its hope of real steps of the market.

the Decision to close loss-making position or leave will depend on how much the mind of a trader controls his desires and how does he assess the situation adequately. The third stage is characterized by the critical losses hope when leaves trader and replaced with despair and despondency. The majority of market players know the feeling of emptiness, when it seems that the whole world is against you. In fact many do not even know of your existence, so nuisance market too exaggerated. Even if you are a person not a believer, remember that not accidentally, in all the religions of despair is the biggest sin.

Reasonable greed must be supported by moderate hope, that seems to be the most reasonable solution in the psychological games consciousness. Look for measures in their desires and actions. A classic example of the manifestation of the enormous greed and the hope was described in the novel A.S. Pushkin's Queen of spades. The main character is mad, when suddenly lost everything he had, before that, however, a game twice has doubled its capital.

Fear of
Fear arises when you get a loss. Some fear paralyzes, they cannot stop and lose everything. Fear makes others fuss and conclude mutually exclusive deal that only accelerates ruin. According to legend, Alexander the great were selected by the army to the people in such a way: in one tent with the test was administered lion. If the subject was, it was believed that he has passed the test. If the subject turned pale, then the army was not taken...

In a moment of stress for some people, blood rushes to your head, and they turn red, which, in turn, helps them to find a way out of the critical situation. The opposing nature of people blood pours from the head. At the critical moment of such people are unable to adequately assess the situation. Leave this parable in modern way, in terms of market trade, at a critical moment it is better to try, than to sit and wait. In this case contrast to the busy actions of nervous choleric reasonable and prudent steps to overcome the crisis, do not panic. Most importantly, so that fear does not affect the mind and actions. Be clear on the plan, drawn up before opening a position.

The psychology of a trader: | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 |

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