Three Pillars That Drowned 95% Of Traders

There are three pillars upon which the art of stock trading is the technical / fundamental analysis, psychology and money management, said the experts of the Masterforex-V World Academy.

There are three pillars upon which the art of stock trading is the technical/fundamental analysis, psychology and money management, said the experts of Masterforex-V World Academy. More information about educational trends can be found on the company`s site.

Of course, without having a fair training in technical/fundamental analysis of the market, as well as money management, you will not achieve success. But as part of our article, we turn to the second stage, psychology, and consider what the hidden obstacles can be expected along the way of becoming a trader.

So, the main obstacles to the trader are: fear, doubt, laziness and greed. Details of these aspects have been considered in the previous issue (Way of the Warrior and the way the trader – that is common?).

We consider the problem with your psychology of trading as an ideological problem, the problem of subconscious perception of the market and the consequent errors.

We all have heard the expression like take care of losses, profits will come itself and limit losses, and let your profits run.

And what does this mean? At first, for me, as for many before me, it was a very vague expression. But once ubiquitous rake shaft loudly knocked me on the forehead and since I have no plans to nurture hordes market serving staff, I tried to understand why and how. And this abyss swallowed my deposit but what came out of it, judge to yourself.

Three Pillars that run you down – three forms of the market comprehension:

The first whale: the market as an aggressive environment in which to survive.

Typically, this option generates a perception respectively and trading style – hard money management and trading style conservative, strict risk management. At this stage, one of the important purchases will be not to lose the ability to restrict losses. Great support, strong discipline and self-knowledge will help the trader. So, uncomplicated gizmo will not only pass this stage, but will seriously address the psychological problems. Description diary of his experiences and thoughts that arise during the trade will make a revision of the emotional background in which the sale takes place. It helps to approach the internal obstacles and to identify the most vulnerable places. It is a psychological component diary and work with it will create a solid foundation of your future trade practices. If do not create strong psychological basis beginning, in the future it will be more difficult to make it and this can lead to unnecessary losses.

A simple technique that allows learning how to work adequately, if you care about size of the received (current) profit/loss is rethinking their experiences and their semantic, ideological ties. Technically, technique reduced to work with two or three tools that allow you to do one, two entrances for the trading session. That is, there should be clear limits to the number of entries on the market, the number of points that are taken into profit, size limits, and stop. It should be a simple little trading system, with a small number of tools and work with clear rules. Even desirable, to yield TC was mediocre, because the task is to develop a primary skill blooded opening, maintenance and closing of the transaction, with a gradual, methodical growth of volumes and sizes of products.

As a perfect example, you can take mechanical trading systems that they have in this regard with the psychology okay. Of course, you could argue that it does not work, we’re not robots – yes, the same robot cannot think creatively, change their preferences, all that they have is a relaxed attitude to the profit and loss, otherwise they are stupid as boots.

There are recommendations to close reading profit and loss on the trading terminal, but the truth is that it will not work, even more than that it can seriously hurt. What do you do when you see what you gain by selling there?

Psycho-emotional state that are the most common at this stage: fear, doubt, stress, a lot of tension. That study of these states is most important one; we successfully overcome the moving to the next.

The value of this level of capacity ideological basis, conscious of the market, you are not afraid. Since overcoming this level comes understanding that the trader is what still needs to be – and we come to the second.

The second whale: the market is a friendly place

Following strict rules of the trading system, calm and not hard work, no threat. At this stage, it is important to learn the stability in making a profit and to continue to work exclusively on the rules of the trading system. If you have learned from the first phase of the ability not to lose, here your main skill is the ability to acquire, build capital. The objective of this phase is mostly a study of your psychological states in sequential build number of items, the value of transactions, analysis tools and trading tools.

Psycho-emotional state is common at this stage:

Laziness, neglect, lack of discipline, impatience. Dullness feeling threatened entails weakening responsibility. Also, it presents a threat to deviation from the rules and inconsistency


Pie in the Sky. Attempts to big goals. Tend to remain small and without. The bottom line is that you can convince yourself the goals would be achieved, contrary to.

Game Trader. Inadequate assessment of its level in trading. And, if at this stage, you have not broken the head, the next you can lose it.

Third Kit: the market it is a contest

Aggressive type of trading, confidence grows into self-confidence. The danger of this stage lays in violating trade rules, excitement. The basis of this perception is stable deposit growth for some time. An important aspect of this stage may be the acquisition of skills to keep greater number of positions outstays drawdown knowing which wave and what level goes against you, and it will end with effective use of money management, risk management and capital.

Psycho-emotional state is the most common thing at this stage:

Passion, greed, disregard the rules of trade and risk management.


Catch the fox ‘s tail. Attempts to calculate the end of the movement and catch the reversal. Catching reversal.

Fallen Angel. Achieving high performance (often very quickly) and the sharp drop.

Inability to stop the fall, the recovery is extremely difficult; the former may never reach the upper level. Often leads to burnout, as subsequently sometimes very difficult to solve the problem of post-traumatic stress.

Mark moose by the horns. I know where the market will go, as a rule, this error arises from the market attributing of his understanding of the situation. The essence of this problem stems from the fact that no matter how well you understand the logic or behavior of the market, the knowledge of the earlier market ends and it cannot be given. As a result, elk antlers take you.

While passing this level, you know, you are almost a trader!

Common misconceptions:

Divorce. There is a theory of divorce, which discusses algorithms why, when and how someone is trying to puzzle someone, to cheat, to use. One aspect of the theory of divorce regarding psychology is the psychology of predators and prey. But this theory, as a whole, has more of a philosophical aspect, and therefore we will not consider in this article, but will turn to this issue as a problem of psychology, namely how and why, by adopting this idea, you will shoot off his legs.

It is necessary to make a difference between the theory of divorce and divorce itself as a psychological problem, in the case of psychological one, you are putting in place of the victim.
In our case, divorce means the market situation, which is difficult to explain, well, it does not fit into your analysis algorithm! This problem does not exist independently, but is in conjunction with another error external enemy.

Bundle external enemy – divorce when someone against you builds deliberately sinister plans. In some cases, it can be useful (if it does not take the form of mental disorder), encouraging you to be vigilant and cautious. It becomes a problem when used as a way to absolve themselves of responsibility, or as a way to compensate for the lack of knowledge and experience. The presence of an external enemy to justify while allowing almost everything (bad weather, etc.).

Trade opinion. Typically, traders seek to unite in a group, team, to work more effectively and find new algorithms market, passing each other mutually enriching knowledge and experience. And here newcomers and inexperienced often lurk into the trap. The bottom line is that new entrants appeared in a similar group when making trading decisions based on the opinions of other, more experienced participants and misunderstood, take wrong decisions. There is an effect opinion analysis, instead of analyzing the market. Thus there is a trade opinion and where to express their assumption while taking profit selling, opinion takes a stop-loss.

Cry Wolf. It is a misconception from substitution values. Such an image is usually implanted through television, and is based on a sense of self-esteem and the formation of ideals at young age. Try to build on this whole business the industry that uses features of the human psyche. Remember the movie Mad Max where unshaven guy rides through the desert, struggling with punks’ mug for gasoline and eats in front of your dog canned it? This is it. Silent, sad loner hero, in life it turns drama. The truth is that a lone wolf – is either a half- crazed ego, or sheep, strayed from the flock, although often both the first and second. In any case, they get one end.

Clean spring. Each of the steps, we have considered, is a step on the way of our professional development and each of them has its pitfalls, we successfully overcome them and continue moving to the cherished dream of becoming a professional trader. If you succeed in passing these hard steps, you would gain invaluable experience and work around to overcome the obstacles encountered, then, you will certainly reach the level where the entire distance traveled will be able to look down upon.

Pure Spring – after gaining experience and skill on the distance covered, it will avoid or solve problems and errors at earlier stages, the perception of the market is changing dramatically. Your perception becomes like a pure spring, you are taking the market as it is, without projections, hyphenation and overcompensation, no personal desires and expectations. You take profit when and where think is right (If it’s not clear, it will become clear later). You are more distressed with fear and doubt, you know where you are strong, and where better to stay away.

Dear reader, once you read this, it means that you had the patience to read up to the end of this article, or you were really interested. Therefore, we invite you to visit the section on the psychology of trading Academy forum and share with us your experience and views in this area. I am sure that this will help us to jointly find the best ways to solve psychological problems in trading as problems ideological character.

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Original Source: Three Pillars That Drowned 95% Of Traders

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