Hi . My name is Sergiu and i am from Romania. I am 27 years old and 6 years experience in trading. In this Topic i will try to explain to you about psichology in trading.
But before that I must point several things that you must understand.Because the truth is here. So here we go
1.Trading in the past was able only on the floor in big institutions called ‘‘Exchange’’
ex. New York stock exchange.
2.Because in the past we had no computers trading was really slow.
3.only people used to trade and they could jump all long or sell and prices could go to the moon or vice versa.
4.After several collapses like it was in 2008 the guvernament decided to take all markets under controll. And so apperead new player in the markets. His name is ‘‘market maker’’.
His job is to provide liquidity at different price levels.Ex level of 50 100 25 and so on.
This way everyone was sure that prices on different stocks wont collapse.That could provide some sort of protection for people.
5.He can work in the market only with limit orders–sell limit order or buy limit order.He can not jump in the market with market order–he is not allowed to do so by low.
Another reason he can not open a simple buy possition or sell possition is because he have huge order. For ex; he wants to sell 450000 lots on EUR/USD he cant do that because his market order is too huge and cant be executed my those who buy . His order will never be executed by market if he wants to jump Long or short by market.
6.Now in our days we have 3 players in the market. Majority,big institutions who trade for ex;50000 lots daily and Market makers.
Everything Above is true. ITS only this truth for there can be no other truth. Accept it or not is up to everyone of you.
Now back to psichology in trading.
We will take a simple example. For ex; we will discuss a buy possition in the market.
You as a majority open chart in the morning, lets say today you like what you see on the chart EUR/USD. And the chart looks like this ,again,this is just an exemple, I want you to understand the process and the psichology.
This is what you see on the chart;
You see a nice support and decide to open buy on this chart wich is usd/cad that took place this week.
Here is what happened later;
Now i will try to explain what happened from the truth and psichology of markets.oF markets , not yours. I dont care what emotions you have when you trade. Trust me emotions doesnt make you win or lose-you must understand it. Ask yourself this; ''when a carpenter is working with wood in the morning, and because he had a conflict with his wife yesterday,it means he cant do carpentry anymore? The answer is obvious He can still do work with wood no matter what.Because he knows the essence of carpentry. Even if he works outside and its rainy or is snowing HE WILL STILL Do carpentry. Thats the truth.
What blocks you from winning in the markets is NoT emotions. on 13th july was my birthday and i was a little drunk but STILL i entered the market it was tuesday and it was profitable trade. You must know the essence in this field thats the key. No indicator will show this. No lines on your charts will show this.
And the essece in trading is this;
- We have 2 types of orders in all markets A. market order B.Pending order.
- In order to make a trade in market a market order MUST meet and Pending order.
ex; You wanna buy now by market and you open buy order . What you did in reall market was you bought some1’s sell limit order at that price. When you sell its vice versa.
A deal in market CAN NoT BE DoNE BY 2 MARKET oRDERS BUT oNLY oNE MARKET AND oNE LIMIT.
When you buy you hit on someone’s sell limit order—this process is called ASK
When you sell you hit on someone’s buy limit order===this process is called BID
ASK and BID are the most important in any market because this creates the price.only this moves the price up or down.
Now back to our chart.
Comes to mind a simple question ‘’ WTF everyone bought at that support and price fell down — like WTF?.
Again , you must understand the essence in trading markets.
Here we come to second process in markets. I will call this process ;opening a trade.
For majority this process in markets are also called consolidation. And on chart it looks like that;
Just a simple consolidation. And this occurs because big institutions comes to market makers and ask to make a market this way so that they can open for exemple 100.000 lots at price 1.25 in one direction.
Now market maker will simply open an sell limit orde UP and one buy limit orde down.
These 2 limit orders are so huge that majority with market orders buy and sell cant consume them thats why price comes back in consolidation.
In the upper zone of consolidation majority open buy by market witch hit in his HUGE sell limit order and price doesnt go up and comes back.
In the lower zone of consolidation majority open sell by market wich hit in his HUGE buy limit order. Thats the whole process and the whole psichology.
And he does this BECAUSE he have to maintain price at level 1.25 so that one bank can open 100000 lots in one direction.
The more price stays in the consolidation the better change that majority will at some point open just in one direction-for exemple at that suport area everyone went buy by market wich hit in banks sell limit order.THIS WAY YoU HAVE FULLFILLED BANKS 100000 LoTS IN SELL.
Now we came to third and last process.
The truth is;
- When you open by market BUY order your SToPP LoSS is a sell limit order.
2.When you open by market SELL order y our SToPP LoSS is a buy limit order.
When majority open in one direction for exemple buy–their stops will represent a sell limit order.
Because majorit went buy and fullfiled banks sell limit order NoW bank is in sell and you are left only with buy limit order. Now we have this ballance; 100000 in sell and nothing in buy by market and only 100000 buy limit orders wich are your stop losses. Because of this HUGE difference in suply and demand,ASK and BID, wich creates the price, pricce falls down UNTILL THESE 100.000 LoTS ARE FULLFILED To CREATE A BALANCE IN THE PRICE AND PRICE WILL BE FULLFILLED BY YoUR BUY LIMIT oRDERS WICH ARE EXACTLY 100.000. Thats why after price stops you out comes to an balance and you see just another consolidation.Because the whole process finished.
And this process occur everyday. The whole secret is in ASK and BID guys NoT IN YoUR EMoTIoNS AS YoU THoUGHT.
Its a game between banks and big finacial institutions and simple majority that actually represent only suply for them .
IF you will understand ASK and BID you will be able to scalp everyday. And to see banks huge limit orders. To understand the balance. By the way I have 97% win ratio in the last 2 years. There are people who knows this . And they based on this truth risck for exemple 20% -30% 40% or even 50% of their capital. They gain like 400-500% profit monthly. We all do this. Everything else its pointless in the market. I mean indicators or lines on chart.
We simply use ASK and BID and we have a clean and pure chart and we trade with all sort of emotions; some times even a little bit drunk we trade. 
Hope now you can throw all useless knowledge about markets that you have. BECAUSE IF YoU DoNT YoU WILL NEVER MAKE REALL MoNEY IN IT. TRUST ME
Make print of what i writed above because as i figured out admins from this site can easily delete my post . Just in case make a print and try to understand.