Monday, 4 September 2017

3 Psychological Traps You Should Avoid

Posted by Valentine at 11:13 Labels:

Difficult times are ahead of us. There is no doubt about it. As North Korea moves forward with its nuclear and ballistic programs, the international community analyzes a series of different measures to counteract the threat and protect world citizens.

In times when the words “crisis” and “fear” become part of our daily vocabulary, psychological control and behavioral understanding stand as an extremely useful tool to protect your portfolio from uncertainty and even further, take profitable decisions. Below you can find a list of three psychological traps you should start avoiding right now:

1 - Focusing only in numbers

Believe it or not. The psychological component in trading is equally comparable or even more important than its numeric side. Why? Because numbers don’t move by themselves, it’s people and their decisions who move them up and down. Decisions based on different factors and emotions, such as fear, confidence or surprise.

2 - Cheating on yourself

One day you wake and you close a great trade. You take profits and are now feeling amazing. It’s like being the Wolf of Wall Street and Gordon Gekko. We’ve all been there and know exactly how great is that feeling. But next morning, things go south. And instead of blaming yourself for it, you take it on the market or banks or whatever comes into your mind. A loss should only be interpreted as an opportunity to learn.

3 - Future is just like the past

Statistics, patterns, researches… the past will always be there and we should take it as a good reminder to build better future experiences. But you cannot think the months and years ahead will be like something you’ve seen before. Ups and downs, bubbles, inflation, common terms indeed. But the reasons behind them and the way they affect people will change and you should keep that into mind for your decisions.

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