Options Trading Psychology Problems! Some Simple Rules!
Psychology Is the Part of Trading!
What do you think: is it sufficient to be able to trade with options correctly? Or a trader needs something more? Most beginners mistakenly believe that’s enough, and suffer losses in their first steps. Now, I would like to tell you about the importance of speculators’ trading psychology; to be accurate of problems with it. They emerge as different emotions making us decide wrong and lose then. Most wasted deposits are the result of harmful effect of emotions.
But it’s not that bad as can seem to be – we can cope with trading psychology problems. Let me tell you how to.
Emotions Are Traders’ Enemies!
I apply this statement for options, forex, stock exchange and any other financial exchanges. In fact, when you get seated in front of your monitor and turn on the chart, you are being influenced and prevailed by emotions such as fear of losses, lack of confidence, crowd instinct and then over-self-confidence, nonchalance and the eagerness for the revenge. All that hinders a trader from working, so you must learn to control emotions or at lest not let them affect your trading.
Emotions at Forex and Option Exchange!
Forex speculators are closely acquainted with trading psychology problems, as they are the most likely to appear strongly at this very exchange. Up to 90% of all losses occur because of emotions, a trader is always tensed, and even professionals don’t always cope with the stress.
But the great feature of the option exchange is that trading psychology problems are by far less there, as the platform is simpler and more comprehensive. Thus, though psychology is an actual problem for a modern trader, it’s not the most important and foremost. There is also some bad effect of emotions, but if a forex trader tempers themselves for several months, you can do it for a couple of days, having mastered some simple rules.
How Do Trading Psychology Problems Come Out at the Option Exchange?
- The most typical way of events: a trader buys the option for no purpose and with no proof of their strategy. Theywantedtobuy, forexample, aCall-optionandtheydidit. Intuition is surely good, but only pro-traders can make their choice subconsciously. If a beginner is trading, they do it hastily and take risk to lose.
- Another problem of modern traders is the lack of self-confidence. It often happens that one has a trading strategy, it gives a signal, but the trader can’t make a decision to buy an option, estimating pros and cons. Surely, if you work with daily options, you have several hours for that, but a 60-second turbo option can’t wait, so you have to make your choice in a moment. You mustn’t doubt at the exchange, as it you’ve started trading, then you have a strategy which has shown its profitability during its testing. So, don’t doubt, buy a preferred option – this is the core of trading.
- Crowd instinct is a problem which was actual at forex and it’s that actual at the option exchange either. Often, beginners try to listen to other traders’ recommendations, and those traders are not always professionals. Anybody can sign up at a forum or a social network, but there are no guarantees. You must trust only opinions of reliable specialists, analysts m and those traders whose professionalism you are sure in. If you trust the “exchange crowd”, then you are the part of it, and the crowd, as we all know, trades with losses. There is the solution: don’t trust anybody, or listen to thos who you are sure in.
- A trader who lost certain money at the option exchange, wants revenge – this is the mistake of theirs. In this case, such trader will play the casino, as everybody knows, people waste money at the casino. It’s important to realize that even the most professional trading strategy can give failing orders sometimes, and even several in a row. If it happens, don’t look for the revenge – just close the chart and relax, and come back the next day with refilled energy and continue trading. As a rule, it does well, the mood at the market changes, and the strategy starts working again, and sometimes with doubled profitability. Remember: those who want the revenge, waste the whole deposit.
How to Deal with Trading Psychology Problems?
- The most efficient way is to create a trading strategy describing the algorithm of actions in details. Which tool to choose, when to enter the market, when to close trading – all these questions your strategy must answer to. And the more detailed will be those answers, the better will be your trading. In the very beginning, follow your strategy, and don’t deviate from its rules, and only then, with some experience, you’ll be able to change rules on the run without any risk to lose money.
- Don’t listen to those advisors you don’t trust to. If you need help – apply for the forecast of a competent expert or that trader in whose professionalism you are absolutely sure. Cheaters are evident – they will never show you a screenshot of their profit in the account, because they don’t have this very profit. Don’t become a part of the “exchange crowd”, and then you will anyway gain. Maybe, your initial profits will not be that great, but they will at least be.
- If you want to learn to control your emotions – apply for the broker’s course and engage in the basic training, and when it’s over, you will be more or less experienced in trading and be able to trade with profits and control emotions at the exchange. As a rule, the more experienced are you, the less is the effect of emotions on you, as any training will be useful for you. Most traders, as I’ve mentioned, provide clients with the chance to make trading principles clear and start gaining.
- In the first stages, I don’t recommend placing big bets. Every broker has a minimum order size, use it. Yes, your profits will be less in amounts, but so will be your risks. You will suffer less stress about saving the deposit, because you operate with not that big funds. If your trading is profitable, increase the bet step-by-step.
Temper Comes with Experience!
Usually, the tougher you become, the fewer trading psychology problems appear. It’s that because you begin to get used to the tense of the exchange, believe in yourself more, realizing that unwanted self-confidence can be fatal. Pro-traders at the option exchange feel almost no effect of emotions, which can’t be said about forex.
As for the conclusion, I will add that trading at any financial exchange give psychological temper which can be handy in any field of activity. People who can control themselves and their emotions, who don’t fall in despair or depressions, who can work even after a row of fails – they’re highly appreciated in any company, able to succeed as an entrepreneur. Thus, trading at the exchange can give you not only money, but many attributes need for self-realization in life.