Tag Archives: psychological

Why Rules and Trading Psychology Matter – AUDUSD Example

Why Rules and Trading Psychology Matter – AUDUSD Example

I wanted to post a review of my previous AUDUSD trade but I thought it will be a good post to record my experience on that trade. EURUSD trade last week humbled me and reminded me of my mistakes which I am glad that I did not do in this AUDUSD trade.

I initially planned for this trade as below:

AUDUSD Bat Gartley Patterns for Long Short Forex Trade
AUDUSD Bat Gartley Patterns for Long Short Forex Trade

But it turned out as below:

Why Trading Rules and Trading Psychology Matter - AUDUSD Example
Why Trading Rules and Trading Psychology Matter – AUDUSD Example

Soon after entry, the market started showing bearish signs but my stops were in place with acceptable losses so it was ok. The market then turned in my favor. And then again turned bearish. It was going completely against me.

It was quite a roller coaster in its behaviour. Honestly at several times, thoughts of cutting my losses and getting out of market for a little profits came to me. But then last week’s lessons reminded me to stick to my plan and rules. Once a trade is in, it is in. There is nothing I can do to control the market. I can only work with it. So I stuck to my plan and accepted that it will probably hit my preplanned acceptable stop loss.

I guess for my patience and discipline luck also favored me by few pips. The market came very close to hit my stops but due to spread it did not.

The out come was great. It hit my first target making this overall trade a break even now and is still going strong in my favor.

Trading Psychology is the biggest factor and that is what differentiates Winning Traders from Losing Traders.
-TradeYodha

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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Psychological Biases in Financial Markets Can Be Deadly

Psychological Biases

A trader or investor must stay objective, logical and emotionally detached. Remember that performance of one trade or few lost trades do not affect the whole outcome. A trader must carry on making rational and logical decisions to make the most of next trading opportunity.

I stumbled upon a great article on twitter by Danan Kirby and thought of sharing here.  It lists down all kinds of biases that we have in markets. Know Your Biases, it will help improve results.

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Credit: http://charts.stocktwits.com/production/original_36332774.png?1430762000

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
---------------------------------------------------------------------------------
Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
---------------------------------------------------------------------------------

Understanding Market Structure Bulls versus Bears

There are only two big forces that drive the whole market.
1. Fear
2. Greed

Both of these induce each other too. For example: Fear of losing an opportunity to make more money. That is Greed inducing Fear. Another example is Fear of losing profits made so far. That is Greed inducing Fear.

Markets are run by Humans and hence these psychological factors are always present in a market. Markets as a whole represents the emotional and psychological state of its participants. These participants can be:
1. Retail Traders
2. Institutional Traders
3. Retail and Institutional Long term holders
4. Market Makers

These factors make markets go up and down. As human nature is so predictable and often very similar, markets follow almost same cycle again and again in which BULL and BEAR patterns emerge. Below are 2 charts which represent these cycles.

Understanding Market Structure Bulls versus Bears

Similar to above

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
---------------------------------------------------------------------------------
Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
---------------------------------------------------------------------------------