psychology in trading- powerful tool for market analyzys

[david wood]

Hi,

I have a friend who wrote the following article in another forum, and from some reason did not posted it here. I think it is important enough, so here it is:

"i noticed almost all of the threads here that talk about psychology, talk about our psychological weaknesses when we trade and how to avoid falling into these traps.

there is another very important aspect- psychology is somthing that sets traps to people, basically all people. that makes their reactions and responses quite predictable.
the fact we know what traps they are about to fall, gives us a clue what the market as a hole is about to do!

another issue in connection, is that the big players and brokers are aware of what i am saying, and use it to predict the market and set traps that make traders act in a predicted way, and then make money based on these predicted actions and responses. that means if a trader is aware, he can look for those traps and also make profits like the big boys. i think this is the only way to actualy beat the market.

it still requires analyzing the market (charts, news, whatever), but with a large picture to place the conclusions in."

Any comments?

[traderpau]

yes, this is called a contrarian strategy

[david wood]

Originally Posted by traderpau

yes, this is called a contrarian strategy

What- the first issue or the second?

[andre82]

I think it is good

[Valkryder]

It's hard enough trying to understand or control one's own personal psychology without trying to guess and react to what all the other thousands of traders out there are thinking or feeling. We've all made bad trades based on emotion. Revenge trading for example. Can't recall the last time that worked out well for me. So now when I see myself feeling that way, I refrain from making a trade. Many times, getting into or out of a trade too soon is based on fear rather than a coherent analysis.

Know thy self.

V

[xtraction]

Rather than try to out guess what someone else is going to do, pay attention to what the market is doing. Price shows you the way.