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Trading Psychology -
Adopt the Right Mindset for BIG Profits!
The fact is the majority of traders lose because they cannot
control their emotions. Trading psychology is one of the keys to investment
success.
A simple fact will illustrate the influence of trading
psychology:
Why the majority of traders lose
There is one
statistic that has remained constant since the beginning of investment records
- the ratio of winners to losers has remained constant over time.
On
reflection, this would seem a startling fact; despite the massive advance in
communications and economic forecasting methods, the ratio remains the same.
The conclusion from the above is that the successful trading is
dependant on something else. That something else is our trading psychology.
The influence Of Hope & Fear
In trading psychology, two
emotions that are constantly to the fore are hope and fear. One of the traders
who recognised this was the legendary trader W D Gann.
"Hope and fear:
I have written about this often in my books and I feel I cannot repeat it too
often. The average person buys commodities because they hope they will go up,
or because someone advises them, they will go up. This is the most dangerous
thing to do, never trade on hope. Hope wrecks more people's lives than anything
else. Face the facts, and when you trade, trade on the facts, eliminating
hope"
"Fear causes many losses. People sell out because they fear
commodities are going lower, but they often wait until the decline has run its
course and sell near the bottom - never make a trade on fear"
Control Emotions and Become a Disciplined Trader
Gann, like
all successful traders, realised that the only way to trade successfully was to
remove emotions from trading, and trade on the facts and realised the
significance of trading psychology on price movements.
To do this, he
applied mathematical principles to investing that would give him the ability to
trade without emotion, with discipline Gann was extremely successful, amassing
a fortune of over $50 million in his trading career.
Human Nature Is
Constant - Exploit It for Trading Success
It doesn't matter what market
you trade: commodities, stocks, currencies, or what type of trader you are, a
day or position trader, the fact is, trading psychology influences the majority
of traders. If you can control your emotions and trade with a disciplined plan
you can gain a trading edge.
A Disciplined Plan for Big Profits
Gann was able to control his emotions by having a specific plan, which
he followed, and the following three principles was the basis of his success:
1. He had a trading method, which relied on mathematical principles
that he had proved over time would increase profit potential and reduce risk.
2. He traded on the facts as presented to him by his trading system and
he never traded on his emotions
3. He used strict money management
principles to run profitable trades and cut losses quickly
He realised
that having the correct trading psychology was just as important as having a
good trading method.
Essential Reading for Any Trader
After
Gann's death in 1955, there have been some excellent writers on trading
psychology including Jake Bernstein, Larry Williams, Dr Van Tharpe and Jack
Shwager. Gann's works however, have stood the test of time proving him one of
the most influential traders of all time.
Emotion is part of human
nature. We cannot avoid it. All we can do is to:
"Act in a way to
overcome the weak points that have caused the ruin of others"
This is
what Gann set out to achieve.
Learn More about a Legendary
Trader
Why not attend one of our FREE Seminars held in London and
cheshire. click here to book on-line or
telephone 0161 285 4488.
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