For market participants, the psychology of trading is especially important, which shows the methodology, technology, principles and direction of the “movement” of a trader in any of the financial markets. Possession of knowledge in this industry allows a trader to achieve maximum results.
Principle 1: Exchange trading is an art
Trading in the financial market requires certain knowledge and relevant skills, like any kind of art: music, painting, sports, etc. For trading, the market is a stage in which success depends on the development of the trader, combining theory with intensive practice. The experience gained is improved with each practical entry into the market, subject to the daily work of the trader on himself. And the job is teaching. It is the development and training of a trader, and not psychological exercises, that make it possible to learn the art of trading in full.
Principle 2: Trader Success – Talent and Skill
The success of a trader is inherently the same as the success of an athlete, dancer, actor, or doctor. The success of all professions is based on talent and appropriate skills. Among the participants in all types of activities, there will be only a small percentage of the best and those who earn thanks to their talent and skill in the complex. The best option for a trader is to find the optimal combination between his talent (what he is good at) and the ability to trade, applying his skills.
Principle 3: Pattern Recognition is a Core Skill
At the heart of trading lies the analysis and study of charts, signals, and pattern recognition. This moment is very important for a trader’s work, because allows you to determine the most convenient methods of work in stock trading. Attention should be paid to your strengths and styles, which the trader prefers. If a trader has an analytical mindset, he will most likely find a common language with statistical indicators and mechanical signals. But if a trader is more visual, then it will be easier for him to work with charts.
Principle 4: Subconscious Learning – The Basis for Pattern Recognition
Subconscious learning is possible only if there is a large or constant practice in any industry, after which this phenomenon simply turns into the so-called “feeling”. Repeated observation of complex patterns develops over time into subconscious recognition. Traders, having received colossal practice in trading in real life, can ultimately determine a successful deal at the subconscious level without analysis.
Principle 5: Factors that Disrupt the Pattern Recognition Engine
A trader can be influenced by several factors that complicate his perception and “dull” intuition, which are the basis of subconscious learning:
- changes in cognitive states
- influence on the emotional state
- physical problems
Traders may face such conditions when the ratio of risks is not observed, trading in large positions, price fluctuations in the market, etc. All this can easily “unsettle” the trader and throw him out of emotional balance. The application of behavioral, biological and cognitive methods in the learning process can help the trader gain confidence and the ability to calmly concentrate.
The path to positive psychology is through education and training, which is a laborious process. But only this approach can help a trader to succeed in stock trading. Constant analysis and feedback on the results of their work will give the trader the necessary skills and useful experience in trading.