In The Trade | Stocks & Mutual Funds |
|
|
|
|
Psychology - How to Reduce Negative Thoughts Relating to Trading?
The thinking process of the brain relating to the psychology of trading involves: -- Beliefs
The positive or negative energy brings power to a person's actions, which ultimately determines whether a person is a winner or a loser. You can change for the better or for the worst. The old saying goes: For as a man thinks in his heart so he is. -- Trading is the most difficult money making skill to master, because the market represents the aspects of people and life. It is necessary to scratch the surface and explain what psychology means and how it relates to trading. Without doing so, you will not understand why this element is important to your trading plan. The psychology aspects of people are separated into two categories: 1. Believers (the first category) who support the belief that something in the realms of other dimensions in the universe exist and It is (the first category) that usually uses both sides of the brain to think and has access to a third component of the brain (faith) that is dead when the person is born. (The second category) only uses a small portion of the brain's power. While (the second category) may or may not use both side of the brain to function, the third part of the brain (faith) is completely dead and non-active. See, the psychology of the brain is separated into three separate parts: 1. Faith If the thought, (focusing on the power of positive thinking), division of the brain controls the emotions, the individual maintains and develops discipline. If the emotions run the thinking part of the brain, the human being lives in a pure state of extreme confusion and disorder. This is why the answer to success is understanding how the correct forms of discipline work - without it you will lose your shirt in the market. Discipline in the following three areas of trading will ultimately determine your trading success. * Training --- The successful trader never rests on past successes, or believes that his trading ability has peaked. He is always learning and practicing his decision-making skills, honing them until they become second nature. Then he can react faster than a speeding bullet, but with the benefit of superior human judgment. * Trading Rules --- The successful trader develops set of trading rules - a plan - that he follows faithfully. This guides his decision-making at all times. If a trader's plan dictates that it is time to exit a stock, the trader will exit that trade and not wait a minute longer. * Self-Control --- Successful traders display an extraordinary amount of self-control. Keeping emotions constantly in check, the disciplined trader is immune to the highs and lows that attend large market swings - whether panic, in a downturn, or of euphoria. I will show you how to learn the secrets of discipline. Can You Learn Discipline? The big question here is whether you can develop the discipline you do not have naturally. I believe the answer is "yes, you can," but you must have the necessary commitment to do so. Ultimately, undisciplined behavior is going to be punished by the market. Private traders who persevere and master self discipline, have external stimuli that will help the process. However, the market does not help as much as it might, because of the principle of random reinforcement. It is the market's tendency to reward bad behavior from time to time. This crucial fact is one of the reasons why it takes so long to learn how to trade. You need to realize this: there is no point in having a system if you are not going to follow it. Follow and develop a routine of self-discipline and you will be successful in your trading ventures. -=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
MORE RESOURCES:
Google News |
|
|
|
RELATED ARTICLES
Market Globalization Just 30 years ago the stock market was a shadow of what it is today. There were many fewer shareholders and the daily volume was a fraction of what it is at present. "Fears Only Enemy Is Action" What a great statement!I just heard someone use it in the context of personal and financial success and it struck me as a brilliant summary of an issue we raise in the SMG Tutorials.Fear is a huge issue with a lot of traders. War Market There is no question that the stock market is being affected by war jitters. When it looks like peace we have a strong rally. Duck Duck! No I don't mean a quack, quack. I meant get down, look out for a huge blob of brown stuff is heading your way. Long-Term Investment In Todays Market? The stock market is very unstable at this time going up and down while interest rates are so low you want to be a borrower and not a lender. Would you like some suggestions on how can you get the most out of low interest rates while being assured your principal will not disappear while you are trying to make some money? Of course, there is always the danger of borrowing the money and then spending it just because it is there. Boiler Room 7/17/00 On Friday or Saturday evening my wife gets a movie from Block Buster and after dinner we sit, hold hands and watch. This week she brought back one that I think every investor or anyone contemplating investing in the market should see. Parachute Investing Ever jumped out of an airplane? It's OK if you have on a parachute. Pretty dumb if you don't. Stock Investment Advice Stock investment advice is easy to find. Do you get cold called by brokers with the latest investment tip? I have, as have countless others around the globe. Leverage - Margin Debt What is leverage?Here is a definition of leverage from an online dictionary "leverage - The use of credit or borrowed funds to improve one's speculative capacity and increase the rate of return from an investment, as in buying securities on margin."Essentially, the core idea of leverage is that investors can use less money to control bigger amount of investment so that investors can make more money when the price movement is in investors' favor. On Line Stock Trading: Small Cap & Micro Stocks Go Up and Down - How Can You Profit? Success in small cap & micro cap stock trading like with any other business in life comes from being able to see the big picture and from paying attention to the small details.Let's say for example that you are a business owner and you have a jewelry store on a given street just like the guy in the other corner does, but still the other guy is making 5 times more profits than you are only because he's doing something different. Market Success Who are the successful investors?There are those who follow the advice of their brokers and financial planners or those who choose to use their own good judgment? If you care to compare the results of the past 4 years from 2000 to now I believe you will see who as done the best job.In the old days at the Chicago stock yards they used to have an old sheep who led the lambs to the slaughter when they arrived on the train. The Right Mutual Funds For Baby Boomers If you are a baby boomer, time is not on your side. Many baby boomers see retirement age fast approaching with little to nothing in the way of retirement assets that will allow them to actually retire and live a comfortable lifestyle. Stuff I continually hear from economists, talking heads, other market letter writers, analysts and assorted "experts" that I need to know all kinds of "stuff" about the stocks and mutual funds I am going to buy and I should keep up with them on a regular basis.What is this important "stuff"?Let's see. The 10 Commandments Wall Street has been preaching for years and years to investors how and where to put their money. The "experts" have put forth these ideas for so long that they seem to be carved in stone just like Moses did with God's 10 Commandments. Does Japan Matter? For the last 12 years we have seen the Japanese stock market slowly sinking from a high of 38,000 to about 8,000, more than a 75% loss and very close to the price of the Dow Jones Industrial Average. Why should we care about their stock market?Please understand that the stock market price is a reflection of the overall economy of a country. Good News? As the man said, "I've got some good news and I've got some bad news. What do you want to hear first?" It was replied, "Tell me the good news first". Ignore Stock Market Talking Heads You should ignore analysts on TV, the radio, the newspaper and all other TALKING HEADS when it comes to investing! What stocks do they talk about? - The same old group, every day of every year - Why? Because they don't know any better, they are sheep like the general public, repeating what every economic textbook says and every other economist tells them to say. Everyday, the same companies are highlighted on the evening news -WHY?They aren't going anywhere. Emotional Maturity If you are going to be a winner in the stock market you must have emotional maturity. I did not say you had to be smart or know how to pick stocks and mutual funds. A Stock Market Investment Plan that Never Lets You Down The bulls and bears of the stock market are both tempting and scary to the investors. Speculators are enchanted by the stock market's potential to help them in making quick money with a big M. Defining a Long-Term Investment in the Stock Market For some "long term" would mean holding a stock position over the weekend. For others, it may mean holding a security for at least 1 year for the purpose of declaring a long-term capital gain, thus saving on taxes.
|
| home | site map | Privacy Policy |
| © 2008 www.in-the-trade.com |