If you are reading this article I am sure either you are already trading in the markets, or you were trading and got burnt badly or you would like to start trading but still haven’t done anything yet. Regardless at what stage you are at I know you will find this article useful.
The belief is 90% of the people who trade the Financial Markets lose. Everyone talks about it but no one tells us the right mechanics to apply in order to resolve it for everyone. But first let’s talk about the main reasons that causes people to lose fortunes while trading the Financial Markets.
Your Emotions Plays the Major Role in Your Failure/Success
No matter how much experience you have in trading or running any businesses at the end of day we all are human beings and our major fuel for our behaviour and results are simply emotions. Our emotions drives our behaviour and feelings and that turns into the actions we take.
- Emotions of Excitement
Trading can be a very exciting activity when things are going your way and you are making plenty of profits. You feel the joy for a while and this exciting emotion can also have a negative impact on our behaviour because sometimes we become over confident and start to treat the markets like a field game that no matter what we do in the markets we will never fail but then when things go against us instead of following the rules of the games we start to hope and pray that our trades will turn around and anticipate the way we initially wanted but then it never happens. And when it does happen it usually effects your psychology and once your psychology is destroyed it’s very hard to recover psychological damage and it can take a very long time.
- Emotions of Doubt/ Fear/ Anxiety
If you ever studied the most traders like Jesse Livermore, Jim Rogers, Richard Dennis and many more. They all say that it is healthy to be cautious in the markets but over cautiousness can also lead you to the path that destroy’s your trading psychology. Sometimes we feel too cautious and feel maybe we should wait a little longer or we might get a better price/entry or sometimes we have a fear that the trade doesn’t go the way we wanted it to. These kind of feelings will affect your behaviour in such a way that you will stop taking action/ execute your trade and in a lot of times when you do it is too late and the right time of executing your trade is long gone.
In a nutshell Financial Trading is just like other adventurous activities such as Sky Diving, Wingsuit Flying and Bungee Jumping. It looks exciting and full of fun but when it comes to it we all need to follow the precautions and more importantly have enough courage to experience it.