Forex Trading Psychology Articles

By all accounts this would be considered a system worth testing in the real world. Don't Deny Reality Forex Trading Psychology Written by Joe Ross If you want to be a successful trader, you must make sure you do not deny reality in any phase of your trading. When the same mistake is repeated a second time, caution should be noted. Van Tharp indicates that the Supportive, Artistic and Fun Loving Traders tend not to have any of these characteristics. Somewhere in between is a period filled with uncertainty and doubt. Maybe if I choose a different moving average or if I cut my losses earlier.

In Dr. Van K. Tharp’s research on trading psychology, he separates traders into a set of fifteen personality types that can be assessed using his online Tharp Trader Test. These trader personality types each have a psychological profile that contains various weaknesses and strengths.

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The Administrative Trader has a tendency to be responsive to changing market environments that can result in profitable trades. In addition to adapting to different market conditions, this type of trader has strong decision making capabilities and can delegate authority when working with others. Artistic traders are characterized by their tendency to use their intuition and creative thinking in their trading more so than other traders.

Due to their creative streak, Artistic traders tend to be more flexible and can adjust to changing market conditions. Nevertheless, this feature can be a double edged sword and cause problems for the trader if they become emotionally attached to losing trading positions. This trader profile is noted for their open minded and flexible approach to trading and includes some of the most successful traders.

Adventurous traders use their ability to respond effectively to market information and are generally accomplished analysts, prioritizing data and using it to make sound trading decisions.

Adventurous traders often take significant risk and focus on factual information when making trading decisions. The Detailed Trader profile is characterized by a preliminary analytical process before taking a position in the market.

Detailed Traders use logical assessment and careful analysis and often keep intricate notes on their trades and reasons for taking them. Nevertheless, many traders with this psychological profile can fall into waiting too long to establish or liquidate trading positions, resulting in significantly lower returns.

This type of trader generally has a serious and sober approach to trading, preferring to trade in a social environment or interacting with other traders. Facilitative Traders often observe the big picture of the market and trade in a decisive and well organized manner.

This trader profile is characterized by a playful approach that includes a degree of social interaction when trading.

Fun Loving Traders tend to have a positive outlook that reflects their optimistic viewpoint. However, due to their optimism and social interaction with other traders, their emotions could affect their objectivity when trading. These traders tend to use their own interpretation of data and act independently of the crowd when trading.

While their abilities to think outside the box can result in profitable trades, their lack of social skills makes them poor team players.

This type of trader is noted for their creative and intuitive approach when analyzing information and establishing trades. Innovative traders tend to be able to process large amounts of information and react quickly in the market.

In addition to their abilities in analyzing and reacting to market conditions, these traders tend to be good leaders and can excel in reading people. This trader type tends to be a competent leader and communicates well regarding trading matters. They tend to be well-organized and realistic, and they make trading decisions effectively. They tend to focus on facts to make reasonable decisions, and they can respond quickly and flexibly to new trading conditions by developing new systems.

Such traders tend to be loyal to social values they deem important and enjoy a social life. They seem most successful as traders when a trading opportunity presents itself that is consistent with their values. These traders typically think and react quickly when trading, although they tend to do so without having performed much analysis beforehand. They can find planning and following through difficult when it comes to their trading strategies.

This trader group tends to make intelligent trading decisions based on factual information, and they aim to develop a suitable level of competence in their trading-related activities. They are typically seen as practical, realistic, well-organized and decisive when trading.

These traders also tend to have the ability to see the big picture when engaged in trading and they can think quickly when needing to respond to shifts in the market. They easily understand difficult concepts and learn actively. Such traders tend to be insightful, solemn and can be depended on for trading activities, although they lack some of the important characteristics of the best traders, so they typically either take on a support role within a trading team or offer financing to more successful traders.

They can also make decisions well and can see the bigger picture. If they can get beyond their emotions and value system, they can become successful as traders. In addition to having identified the above fifteen trader personality types, Dr. Tharp has also determined several key psychological characteristics of successful traders.

His research on trading psychology led him to identify three key psychological traits shared by just about all of the best traders. These include the following overall personality characteristics: Tharp identified that Planning and Strategic Traders tend to show greater potential for initial trading success due to them having all of the aforementioned personality characteristics. On the other end of the spectrum, Dr. Van Tharp indicates that the Supportive, Artistic and Fun Loving Traders tend not to have any of these characteristics.

Rather than trading themselves, they can often do better by allowing other people to trade their accounts for them, unless they plan on performing considerable work on themselves to correct their sub-optimal trading mindsets and develop the personality traits necessary for success.

In between the above two groups are those trader personality types that have only two of the above characteristics. In order to learn about the optimal trading psychology and mindset, many novice forex traders choose to read some of the seminal literature on the subject. The following books comprise a short list of five such books that many experienced traders would recommend to a beginner interested in the subject of trading psychology.

I don't care how good your trading system is, without the discipline needed to follow the system you don't have much of a chance for success in meeting your goals. Disgruntled Forex Trading Psychology Written by Joe Ross You have been faithfully following your trading plan and the rules you've set for trading.

By following them you are now in a trade that doesn't look so good. At the same time, by following your trading plan, you see that you've missed a beautiful move in a different market, one that could have made you a lot of money. Don't Deny Reality Forex Trading Psychology Written by Joe Ross If you want to be a successful trader, you must make sure you do not deny reality in any phase of your trading.

You cannot deny losses, price direction, mistakes you make, being undercapitalized, or a whole host of things you would rather not think about. When you were teaching us at our Forex office in Florida, you stressed discipline. Our head trader stresses discipline. What I want to know is if discipline can be acquired or is it just something you are born with? When the same mistake is repeated a second time, caution should be noted. The third repetition of the same mistake constitutes self-destructive habitual behavior that must be reversed.

The greatest reason traders fail is fear. Fear can arise from your lack of belief in your abilities. Forex Trading with Optimism or Pessimism? In contrast it would seem that a more optimistic trader would tend to trade more often, taking greater risk.

The Advantages Of Trading Alone Forex Trading Psychology Written by Marquez Comelab You are free to make your own decisions without having to find a way to explain the rationale of your decisions to anybody else. Your time and effort can be focussed on what the market is doing and how you react to it, instead of worrying about the psychological and emotional dynamics of a trading group. Forex Trading Psychology Written by Joe Ross There have been times when I made mistakes under pressure, but I don't recall ever cracking under pressure.

By that I mean I didn't panic, but I have come close. Being short soybeans when Chernobyl blew up was probably the closest. Traders should feel bad when they lose money only if they fought the market trend, or violated their own trading strategies. The best traders have a healthy "so what, big deal! Can You Really Make it as a Trader? You alone are in control; take responsibility for your performance and your life.

There are always tremendous opportunities in the markets. It is not what happens, it is what you do with what happens that makes the difference between profit and loss. What if you can't help it, but you are really afraid to fail as a trader. You have put so much into your desire to trade. You have a wall full of books. You have invested most of your money.

You don't dare fail now, but you fear you will. How do you deal with your fear of failing? Steenbarger Before we get into the topic of destructive trading, allow me to explain how psychologists assess whether or not a person has a problem with alcohol consumption.

Here are ten questions that a professional might ask in order to assess any kind of substance use disorder, including alcohol abuse: Van K Tharp Most people make a big deal out of market prediction. The Miracle of Discipline Forex Trading Psychology Written by Rob Booker I have read just about every trading strategy book out there — and hundreds of self-help books -- and all of them have impacted my life positively.

However, for much of my life I struggled with a lack of discipline, and as long as I struggled with discipline, I was always almost successful at whatever I tried. I remember him because he was always so calm and collected. This guy never seemed to get frazzled. Then one day I struck out.

Steenbarger Trading is a performance activity - This is the core idea behind my most recent book. Like the playing of a concert instrument or the playing of a sport, trading entails the application of knowledge and skills to real time performances.

Trading Psychology Articles:

The Psychology of Forex Trading I have been a trader long enough to know a thing or two about how most people think while trading the market. You see, most people experience similar thinking patterns and emotions as they trade the markets, and we can learn many important things from the differences in the way losing traders think and the way . Oct 03,  · The Winning Trading Psychology - sure way for consistent profits. Beginning. Welcome to the most important and the least focused aspect of trading. Over traders have been through his acclaimed Advanced Forex Course for Smart Traders. His book The Consistent Trader: How to Build a Winning Trading System, Master Your Psychology, and Earn Consistent Profits in the Forex Market covers the art and science of Forex trading like a professional.