Trading Psychology
You will learn about the following concepts
- Why psychology is important
- The process of becoming an accomplished trader
- Market sentiment and crowd behaviour
- Recency bias
Welcome to the fourth chapter of Trading Pedia’s Forex Academy. In this chapter we discuss the psychological side of trading, which, along with money management, is one of the most underestimated topics and is often the difference between an experienced trader and a beginner.
Many investors quickly come to acknowledge that, despite being familiar with winning strategies, systems and money-management techniques, trading success depends on one’s psychological state of mind. If you’re a trader who has just started out, where will you find the initial confidence to pull the trigger? How do you cope with periods of drawdown without digging yourself deeper into the hole? If you are in a hole, how do you work your way back out? How do experienced traders push through the ceiling of profitability that restricts their early trading for years?
The following articles aim to familiarise you with the emotions you may encounter while trading and explain how to deal with them. You will learn about market sentiment and crowd behaviour, and, more specifically, how to read them. You are welcome to start with this chapter.