Trading Psychology and Mental Stability

in LeoFinance3 months ago

Human feelings are the psychological interpretation of different mental conditions, which drives the way a human acts naturally or irrationally. Every aspect of human life requires mental focus on things or tasks to be done, that are being derived from the psychological dispositions of humans.

Humans have a complex system of sentimental discharge when it comes to decision-making and thought processing, be it as simple as looking at something or engaging in a mentally challenging task.

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Psychology is a vast field of human behaviors and mental attitudes towards how someone tolerates ongoing occurrences and situations.

Traders also go through different emotional states while performing trades in the market or thinking of open trades, such as excitement, anger, sadness, happiness, anxiety, fear, greediness, confidence, regret, calmness, and many other associated feelings.

Trading Psychology provides us with the knowledge of a trader's thoughts, feelings, and cognitive responses towards trading activities and their outcomes.

A trader's mental approach to trading varies according to his/her expertise, experience, and financial stability. New and young traders often think of trading as a quicker way to earn big money with small funds, but when they enter the market and place a trade they tend to realize the actual merits and demerits of trading.

The majority of new traders put themselves in a gambling situation, especially in leverage trading, and lose their precious funds within a few seconds when a trade loses its margin. These situations develop anxiety and anger among novice traders, and a strong feeling of failure and discomfort arises in their minds which leads them to take desperate actions and mental instability starts to trigger.

A similar situation occurred with Alex Kearns, a 20-year-old college student, who committed suicide after mistakenly understanding that his Robinhood account had a whopping $730,165 negative balance. As sourced from CNN Business, Kearns tried to contact Robinhood to learn about the negative balance but did not receive any human response except an automated email.

Indeed, this is heartbreaking news in the trading community, but also gives us a deep insight into trading insecurities and how trading firms provide their customers to trade more than they can afford. The case also teaches us that the consequence can even be fatal due to depression and fear of losing money and owing to debt.

Experienced traders often break up due to their overconfidence, opening so many trades in a volatile market drains their funds quickly through stop losses and margin trading. This kind of sudden shock causes long-term mental stress which leads them to other psychiatric problems in the long run.

Sometimes, the market itself becomes the cause of trouble for traders, as traders keep their investment in the form of stock securities or cryptocurrencies, the prices become so low that they could not close the trades and then a long arduous wait starts in hope of the price escalation someday. This kind of onerous trading situation put them in financial problems, and some traders even take loans to cope with the situation or even start over to earn more profits.

We can relate this situation to a news published in about a young person who trespassed into Terra Labs co-founder Do Kwon's apartment compound after alleged Luna and UST price falls, and he also claimed that many devasted investors committed suicide during the interrogation

Trading is not for everybody, but everyone thinks of earning passive income through investing in securities and crypto. Fear and greed factor also influences traders to enter or leave the market and impacts their decision-making to accept the risks or to hold the reigns for not putting their investments in trades.

To become psychologically strong, it is important to conserve good mental stability by becoming literate about trading and market conditions. A knowledgeable trader would have less fear and anxiety compared to an inexperienced trader.

The trading experience does not come without practicing trading, but learning how to trade and how the market works helps overcome mental issues that arise for an inexperienced or a novice trader.

In conclusion, it is very important to study trading techniques, understand market behaviors, and practice with small investments that one can afford to lose. Profit and loss are two critical factors of the trading business, treating it like gambling as a matter of luck is not the way of a trader, it is about understanding and knowledge about trading.

Author: emaxisonline

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Or just stick to investing, trading is too stressful sometimes

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I stick to having fun and enjoying life. This is the best investment.

@xplosive Exactly, it keeps us happy and well. Thanks bro.

Investing is also a type of long term trading, psychological effects apply on both traders and investors.

Thanks for your feedback.

I mostly invest vs trade. With a few exceptions. Statistics tell us it is quite hard to be a successful trader, but for those who can master it.. Good on them.

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Investment in commodities is less stressful, but crypto investors are also prone to anxiety and fear as I have given the example of Terra crash.

Trading is indeed not for everyone, but those who study market can get good results.

Thanks for being here.

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One of the factors that everybody speak about when you are a day trader is the psychological burden you have and how much stress you are forced to endure, great post about how to deal with this and how to become a better trader! Thanks for sharing this on Leo Finance, we hope to see more content from you in the future!

By the way @emaxisonline, we noticed that you powered up some LEO tokens in June 15, thanks for joining LPUD and helping the LeoFinance community grow stronger!

Just dropping by to let you know that the second edition is just around the corner, hopefully you'll join once again!


This Leo Power Up Day is special because it's part of the LeoFinance & Blocktrades HiveFest contest and if you join this LPUD, you'll be one step closer to winning one ticket with accommodation included to attend HiveFest!

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I am little disheartened with Leo in regard to community support, I wrote to Kazi in Discord, but he did not even care to respond.

Thanks for your comment, but I'll try to keep up with LPUD

I get 100 messages a day, imagine how many Khal gets? I'm pretty sure he didn't respond because he's too busy, not because he doesn't care.

In what way are you disheartened with Leo regarding community support?

Kazi is an active person, his engagement is quite obvious in Leo promotional content, may be you are right, but as active he is I thought that he would respond.

Bro, if Leo community curation does not support genuine publishers and rather award good rewards to shitposts how could regular members will keep posting in LeoFinance.