Do not let the market turn your head
Standardization and ease of organizing trading with various financial instruments and modern technologies make it possible today even for ordinary people without special training not only to work easily, but also to earn. And therefore, you just need to want … I have already told you about this many times – where to start, how to find your place in the financial sun, how to choose a broker and how, finally, to find your strategy of behavior on the financial market. The only thing I have never mentioned is the psychology of human behavior when trading in financial markets.
Many here immediately give up and say: think, some kind of psychology, what can you do! We ourselves with a mustache! I will cite the data of one survey that we conducted several years ago among successful (namely, successful ones – we knew for sure!) Individual traders. One single question was asked: what is most important in trade – psychology, general knowledge or a trading strategy. It was necessary to put down each of these parameters points on a 100-point scale. And that’s what happened in the end.
Formula for success in the stock market
Despite the fact that the scatter of estimates was quite large, every single trader put psychology in the first place – this time. Secondly, the range of points set by psychology ranged from 50 (this estimate was given by the youngest participant in the survey) to 95. What is 95 points? This means that you can practically know nothing – only some of the most important fundamentals, but if you have developed strict rules of the “game” and you can strictly adhere to them, then you can hope for success.
On the one hand, the importance of the psychology of stock trading is extremely high, and on the other – everyone should actually engage in self-diagnosis and self-treatment. But even with self-medication, a person should know that such a disease exists in principle. And in order not to start this disease, we must at least identify it at the first stage. Therefore, today we will begin to talk about the basic rules of stock trading, which rest on the psychology of human behavior on the financial market.
First success is dizzy
When a person starts trading, he is basically not afraid of anything. Because he does not know what to be afraid of and what consequences this or that error may entail. And therefore, he works (here, by work, we mean exchange trading and independent execution of exchange transactions) calmly. At the initial stage, the beginner has a global underestimation of the market. What? How? Where? There is no knowledge yet and therefore, oddly enough, quite adequate and sound actions are often performed, which lead to a positive result. Sometimes they say: newcomers are lucky. This is true, but it’s probably not luck, but objective observance of common sense. In general, it must be said that common sense is a great thing and it is advisable to always act exclusively in accordance with common sense. But unfortunately, this is not the case in stock trading.
After the first small success of a person, “wings grow” and he begins to “count money”. But if I continue to earn money, then in six months I will buy a car, in 2 years I will get an apartment, and in 5 years I will become a dollar millionaire … And there is an excessive self-confidence. A person still does not know that in the market he can control only his losses, and no one ever knows how much money and when he will earn and whether he will earn them at all. In addition, the market (we will consider it here as a kind of faceless living creature) is just waiting for the moment when a person relaxes and … soars his sweet dreams to heaven. And the person obviously overestimates his own capabilities and aims at a too quick result.
In the event that you really only entered the market and earned a lot in the very first transactions (this sometimes happens), then my advice is to close the account, take the money and run away from the market as far as possible. It’s like in a casino where you hit the bank: if you stay, you will lose everything, so away! And bless fate for such a gift. Unfortunately, in 99 cases out of 100 people remain and get what they should have received – a donut hole.
And this is the absolute truth – you can earn, but you can not win. And after the “demolition of the roof” begins a period of chaotic search for a way out of this situation, which only aggravates the situation.
Earn – you can win back – no
The market does not forgive such and revenge cruelly. The impact from the market is usually sudden and extremely tough. There is even such a professional saying: the first bill is the tuition fee. This naturally leads to the question: how much do you agree to pay for such studies? The logical answer is: the smaller, the better. Therefore, your first actions in the market should be very careful and with little money. It is clear that everyone has their own concept of small money – and make a start from their understanding.