Day Traders

Day Traders and Trader Psychology

Professional day traders know about trader psychology and how it affects their day-to-day trading. Trading anxiety and other trading emotions can greatly impact every trader’s ability to succeed when investing in stocks. It is for this reason that it is very important for traders to understand some of the concepts associated with investment psychology.

Genius Traders understand that they must learn to accept and recognize their emotions. Too often you hear investors say that they need to rid themselves of emotions when learning how to trade stocks. Not only is this impossible to do, but you wouldn’t want to completely rid yourself of emotions while trading.  All traders must learn to recognize their emotions and then they must come up with a plan to address these emotions in a way that positively affects their trading. Also, it is important to understand that our emotions can act as triggers, just as technical indicators act as triggers, to tell us that action is needed. While we don’t want to base our actions on our emotions, emotions can help us to determine when action is needed.

We quickly learn in stock trading 101 some emotional investors tend to make up trades if their profit / loss is negative and they are waiting for their next trade to come along. These traders display emotions of anxiety and impatience. As a result they may jump into a trade that goes against their trading system. These traders continue to increase their losses as they tend to force trades rather than wait for trading opportunities.

There are numerous other emotions that emotional day traders can suffer from including the inability to accept a loss, confirmation bias, and many others. These emotional trading concepts as well as many others are addressed in the study of the psychology of investing and addressed in my Free Stock Market Podcasts.

MARKET COMMENTS BY MARTIN

In the video below I discuss a contrarian position we initiated long stock market long US Dollar, I’ll explain why we took this trade and how we will manage it.