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Trader’s psychology. Approaches by type of trading

Posted on 12/11/202129/03/2022 by Debra

As you know, in 90% of cases, mistakes made by traders are made at those moments when they fail to cope with their emotions. Succumbing to the fear of loss or greed, which are the main enemies of the trader, they commit rash actions and are eventually forced to part with part of the deposit.

However, it is difficult to argue with human nature, which has put in us changes in the chemical composition of blood, which is transformed under the influence of hormones.

So, at the moments when we see a growing profit on a computer or smartphone monitor, we have an increase in mood and produce dopamine. The hormone of joy tells us: “Success is near, let’s do more!”

And at such moments, we recklessly increase the volume of the transaction. At the same time, having failed, we feel the effect on our brain of the so-called sadness hormone, namely a mixture of cortisol and prolactin.

As a result, we begin to experience a depressed state, followed by a desire to quickly fix everything in order to return the lost euphoria. Many of us are well aware of how such actions end.

 

HOW TO COPE WITH YOURSELF AND AVOID MISTAKES

In order not to succumb to the influence of the forces of nature that force us to do rash actions on the cryptocurrency exchange, there is only one right means. We must strictly follow the trading plan!

To do this, first of all, you need to clearly define the trading approach in order to know exactly in what time you are going to act.

After all, what you choose: intraday trading, scalping, medium-term trading or long-term investment, will depend on your psychological attitude, determined by the target levels on the chart.

And already based on the period in which you will trade, you will be able to proceed to the next stage of work on emotions.

 

DEFINITION OF GOALS

Before starting to open a trade, experienced traders always make a preliminary calculation, clearly identifying for themselves the levels at which the entry point to the market, the volume of the transaction, as well as stop loss and take profit orders will be set.

This allows you not only to see how expedient the transaction is, but also to guarantee peace of mind during its conclusion.

After all, when you clearly understand how much you will lose in case of failure, you know for what profit you risk and how long it will take, you stop being nervous, thereby reducing blood hormone levels.

Thus, if you stick to the trading plan, it will become much more difficult for your emotions to take over you than when your trading involves chaotic races for price.

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