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7. 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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Successful traders and those who are still on the way of becoming, in General, agree that risk management is a Central element of trading success. But actually there are two kinds of risk, and both would require careful management.

the First type of risk is obvious: the risk of loss of your trading capital. Here, a lot was said about money management, and even more will be said in the future. So for a moment let's disregard this kind of risk.

Another type of risk is more emotional and психологичен. This risk threatens your sense of self-esteem and confidence when you are trading in new ways that exceed your comfort level.

Often you do not want to exceed this level of comfort because it accurately determine those markets that you know where you are experienced and competent. These are the areas where you have the greatest chance of making money, and here you have to do most of their transactions.

But from time to time, you might face certain circumstances, when want to retreat from what you know well. If the situation works, you will gain some benefits. There are three reasons to do so:

To grow, as a trader: If you never experience a new kind of trade, you will always sell well-known method. This is sometimes useful. But, if you want to develop your trading skills, improve as the evolution of the market, and expand their ability to make profits in the market, you need to from time to time to try new types of trade.

To explore new markets: Many traders make a career in only a few shares, or several instruments. But others that's not enough, they soon begin to feel connected. It is important for them to explore new types of trading. This not only provides new revenue opportunities, but often helps to learn how to better use the already familiar profit opportunities.

To increase your resistance to stress: the Existence within your comfort zone - not bad, but it does not prepare you for unexpected situations. Some traders feel better when they prepare yourself into the unknown, very cautiously experimenting with situations that make you think about. When you postpone your stress level, results will improve, even if you work in a familiar environment.

Optimism and skepticism
Investment and trading decisions are to be made in anticipation of future price movements. If we consider the process under a magnifying glass, we see that the investor or trader forms a hypothesis, and then seeks, in accordance with her to carry out his plan of trade.

the day trader can complete this process within seconds, waiting for the immediate result, while long-term investors will try to devote more time to thinking about the hypothesis, in anticipation of a better long-term results.

In any case, in the formation of hypotheses about what will be the future price movement, often plays the role of skepticism. For example, suppose an investor initially puts forward the hypothesis that in the next 2-3 years interest rates should rise. In an attempt to be reasonable and objective, reasonable investor would look for the reasons why interest rates cannot grow.

It may be skeptical of the focus on these causes, solving avoid investments, which summoned would profit from a rise in interest rates. This type of thinking is common for intermediate traders, trained by bitter experience, when the market opposes what they firmly believed. In extreme cases, some traders even cease to fight with my inability to generate hypotheses that can be firmly believe, and therefore could not make decisions.

When forming hypotheses successful and experienced traders tend to be more optimistic, in accordance with its value for the win. They understand that the General hypothesis on economic data or market sentiment often ultimately turns out to be true, even though they are now able to find some parts that contradict it. Supports knowledge of the psychology of the crowd and how pricing models in the markets reflect this mentality.

Here should not take a position opposite to what they believe the mass, and use the consequence of their faith.

it is important to properly manage any manifestations of skepticism when forming hypotheses. Instead cultivate optimistic feeling that will happen in the future.

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