| | When you go into trading, you learn that investors require many skills. Such skills include the abilities to evaluate a company's news and financial updates. They also include using these updates to determine the direction of a stock's trend. However, an investor's most important skill is to have control of their mindset. | Containing emotion, thinking quickly, and exercising discipline are components of something investors call trading psychology. Let's take a quick dive into what is trading psychology and what drives investors to make certain decisions. | What is Trading Psychology? | Trading Psychology refers to the emotional component that goes into an investor's decisions. It represents aspects of an investor's character and behaviors that influence their trading actions and can be as important as other attributes such as knowledge, experience, and skill in determining trading success. | Trading Psychology is characterized primarily as the influences of both greed and fear, the two most common emotions that investors experience through trading. Trading Psychology is also influenced through two other emotions that drive trading behavior are hope and regret. Additionally, discipline and risk-taking are two of the most critical aspects of trading psychology, since a trader's implementation of these aspects is critical to the success of his or her trading plan. | Understanding Trading Psychology | To understand how trading psychology works, we must dive into the emotions that drive investors to trade. Greed or, better said, an excessive desire for wealth, drives any investor into the market. After all, the goal with any financial market is to leave with more money than with what you came in with. In fact, During January's GME craze, a lot of people truly thought the stock would reach $500 and once the stock reached an all-time high of $470, a lot of people held on until the stock began to crash. This was when a lot of people began to lose money on their investment. | Another emotion that drives investors is fear. We, as investors, fear losing money. Actually, no body likes losing money and it's safe to say that the reason why no one likes losing money is pretty self-explanatory. Fear keeps investors from taking on certain risks because of concern over large losses. Sometimes, fear causes huge selloffs in the market and we begin to see investors panic selling. | How to Contain Trading Emotions | Discipline and strategy is the best way to overcome the emotions that come with trading. Anyone can tell you to trade with your head, not with your heart, but that's sometimes easier said than done. As we saw with the GME craze, a lot of people let greed get the better of them and, as a result, many lost out on huge gains. What a lot of new investors forget is that trading psychology depends on containing emotion, thinking quickly, and exercising discipline. You'll have to make decisions within seconds and when you hear news about the stock market, you will have to put your fear to the side and think on your next move. Having the proper research and staying flexible on your plans are the best way to trade with your head. | | | | | | | | | Gage Cannabis' Latest Play Moves them Closer to the Jack(pot)... | Michigan's high-quality cannabis brand, Gage Cannabis, has announced that it will begin serving adult-use consumers at its second COOKIES provisioning center in Kalamazoo this weekend. Find out what this means for the future of Cannabis and the future of the weed market...
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