How Important Is The Trader’s Psychology?
Before we find out, let’s see what it is when we talk about online trading.
Online Trading will allow you to buy and sell financial instruments such as:
- Government Securities.
The advantages in the use of services of this type online will be in particular the lower commission costs required from the investor and the possibility for the latter to be well informed about the performance of a particular security or the stock exchange in general, through the display of graphs and reading useful information on the securities, to make with more data investment choices. This type of practice will include various ways of operating by the Traders.
According to the time horizon you will have the Scalping, that is the opening and closing of positions on various financial products, where in most cases it will be Shares in a very short period of time, in the order of a few minutes.
It will be important to know of the existence of high frequency trading, which through the use of algorithms will allow you to enter and modify orders at very high speed.
This phenomenon will be examined by the competent supervisory authorities for possible effects of alteration in the conduct of trading.
Useful Strategies To Learn For Greater Profit
High-frequency trading is associated with the so-called Flash Orders, i.e. systems capable of systematically beating traditional operators over time, as well as other strategies, including those called Pinging, Smoking, Layering, Spoofing, which simulate market situations with the sole purpose of inducing traditional operators to make wrong transactions as a reaction to unreal stimuli.
In Italy there are many companies that carry out this type of activity, offering real platforms. Since this is still a business, before relying on one of them it will be important to remember that you are dealing with a high-risk service.
For the development of technology and the absence of limits on the number of daily operations by the individual Trader, This is an activity that can unwittingly develop a strong involvement, as it will easily lead beginner Traders in particular to gradually increase both the time spent and the number of negotiations with the suggestion and illusion of dedicating themselves to a job that, on the contrary, can often be a source of losses even high.
The Psychology of the Trader
Psychology is a key element of financial trading and the way you perceive and react to trading can be crucial to success. Psychology, specifically how you will feel and react to your trading activities, will be a determining factor in the often overlooked trading process. All the Traders see the same prices, read the same news and analyze the same charts, but they differ according to what happens in their mind, and it makes that some draw gains and others do not, because they all react differently.
A wide range of emotions can affect your trading both positively and negatively. Emotional Trading can take different forms, but almost always negative.
Some fundamental concepts of the psychology of Trading to keep in mind are for example the following, you should first of all warn not to set yourself narrow time targets, because many Traders think they can get to Trading in a short time and that therefore they can start earning in a short time.
There is nothing more wrong, because the only thing that you will be able to do in a short time will be to fail, the statistics confirm in particular for those who are at the beginning, will have the almost certainty that this happens.
First Rule: Set Yourself A Time Target
It will be necessary to set an adequate temporal objective, that can be as an example two years to arrive to be a Break Even Trader, that is the one who succeeds in paying the costs of making Trading, without still earning a penny, and five years to arrive to be a profitable Trader and therefore to arrive to be able to begin to consider the possibility to dedicate himself exclusively to this activity.
These times should logically be considered adequate for a person who can devote several hours a day throughout the week to trading and learning,
or alternatively those who carry out another activity will have to dedicate weekends and holidays of all kinds to learning Trading. Another fundamental aspect will be not to underestimate the costs of Trading because even if it does not seem so, Trading will cost you and you will have to know how to treat this activity like any other business activity.
But All Of This Has A Cost
For example, the costs could be those of the computer and internet connection, then there could be those of software and data supply. You will need to try to keep all these costs to a minimum, then there will be the costs of commissions, taxes on any earnings and account keeping and accounting costs, it is advisable to keep a very accurate record of all activities.
You will also need to calculate a minimum wage with which to count the study time spent on trading and aim to recover it. You will not have to be under capitalized, because some Trader beginners think lightly that you can start trying with Futures, maybe with mini, because they are mini and you can not hurt yourself, but there is nothing more wrong. In essence, the problem and at the same time the advantage of the Futures lies in the leverage, that is, that with a small amount of money you can control a much higher capital.
With Futures you should always keep in mind the exact value invested, not the margin of guarantee paid. Futures may have to be the point of arrival, not the point of departure. It will not be necessary to arrive obligatorily to the Futures, but you will be able to make Trading for a life in Stocks and ETFs and to succeed in any case to obtain more than satisfactory results and if you will succeed to make Trading with the Futures, it is advised to have an available liquid sum corresponding to the value actually invested.
We also advise you not to hide to your family members that you are trading, because lying to yourself and your family members about the results, losses and your skills will be as wrong as you can get. Those close to you, and in particular those who depend on you, should know exactly what you will do and support your choices, because if you find yourself trading in secret or lying about losses and negative results, you may find yourself on a dangerous road, very similar to that of the video poker player, from which you will no longer distinguish anything and even the damaging effects can be very similar and in the case of Trading often much more serious.
This will not mean to tell every detail of their operations, but it will be necessary to keep abreast of the general trend and progress that you will be doing in Trading, without lying or worse emphasize the positive results and hide or minimize the negative ones.