There are four psychological kinds of emotions that drive most individual decision making in any market in the world: Greed, Fear, Hope and Regret.
The psychology behind trading is the force that makes the moves in the market. Besides a good Elliott Wave analysis and proper money management, trading psychology is crucial for being successful in this business.
Understanding Emotional Triggers in Trading Decisions
1. The Destructive Power of Greed in Trading
Greed could be defined as a trader’s desire to trade in order to provide an unrealistic profit. Greedy traders focus only on how much money they could have made. This emotion frequently leads to ignoring proper money management and often prevents a trader from taking profits on a winning trade.
2. How Fear Paralyzes Trading Judgment
Fear is a survival response and probably the most powerful of all human emotions. When afraid, a trader will sell a position regardless of the price. Fear usually leads to panic, which again causes poor decision making.
3. Why Hope Is the Most Dangerous of All Trading Emotions
Hope is what keeps a trader in a losing trade after it has hit the invalidation level. It may be the most dangerous of all human emotions when it comes to trading. There are many trading platforms you can trust for their good market reputation.
4. The Paralysis of Trading Regret
Regret is defined as a feeling of sadness or disappointment over something that has happened, especially when it involves a loss or a missed opportunity.
These 4 emotions affect trading very negatively and every trader should find the way to get rid of them, or at least to control them. You can learn more on how to improve your Trading by clicking here.
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