Introduction to Trading Psychology
Why is Psychology Important in Trading and What is FxST Doing About It?
Most dictionary definitions of Human Psychology or Psychology will include some of the following:
- The science that deals with mental processes
- The emotional and behavioral characteristics of an individual, group, or activity
- Subtle tactical action or argument used to manipulate or influence anther
Most of us have an idea about what human psychology is and the above is likely not new information; however, allow me to make the connection to trading and then elaborate on why this is so important to all traders at all levels trading any market.
First, I must share that I believe there is such a negative stigma about psychology or psychology when individualized to the self that it its’ importance in trading tends to be minimized (in the industry and by individual traders). Further, it is the one area which is not spoken of enough. It is often spoken of too lightly or under another guise in order to soften the blow of a down right, get real, discussion of ourselves.
When we decide to enter trading as a profession we expect charts, technical analysis, strategies and other common elements everyone hears or sees when searching about learning how to trade a market. I am going to venture to say that the entire industry of trading the markets main focus is on the wrong area. What did she say? You may be thinking?
Today with the years of experience represented by FxST’s traders, if one is to go on any website focused on the education of traders and trading any market, it would not be a surprise would that at least 90% (generous number) or more of their content and focus is on strategy, money management, and market analysis. Trading psychology and trader phycology is pushed way down to the bottom of the priority list if it makes the priority list at all. Let’s put this it into a numbers perspective. You are likely to read or see visuals, in your search for information on trading and throughout your educational process, that say trading is 10 % strategy, 30% money management, and 60% psychology. According to the statistics just presented, logically speaking, we as traders should be more focused on market psychology and our own psychology and its impact on our trading.
In street terms we really need to get real with ourselves otherwise all the other stuff in your trading arsenal is worthless. Consequently, the reality is you will never become a consistently profitable trader unless you are able to self-direct your own development as a trader by consistently focusing on the right areas at the right time in an environment (the market) that constantly changes from minute to minute.
Here at FxST we realize the significance of psychology in trading and we are doing something about it! The new addition to our trading arsenal is a commitment to be on the leading edge of informing our traders about the psychology of trading and educating them as to how to master that 60% of trading so that the other 40% of trading (that we also address) works effectively and efficiently.
Therefore, this series is the launch of how FxST will better target the 60% of trading for our traders. The traders at FxST are not the “big boys” that move the markets and we do not employ a team of psychologists specialized in this area; however, we know, we see, we understand, and we are acting. Stay tuned for 10 articles which will comprise FxST’s first formal series in Psychology & Trading by Dr. Debbie Badawi, FxST’s Educational Specialist, who will tackle Psychology and Trading on an ongoing basis.
The first article series in Psychology & Trading will include the following:
Article 1: Introduction
Article 2: The Secret
Article 3: The Human Mind & Trading
Article 4: A Leading Expert In Trading Psychology, Trader Psychology, & Market Psychology
Article 5: A Map To Truly Understanding Trading Psychology & Your Trading
Article 6: Applying the Map of Understanding Trading Psychology and Short Term Trading
Article 7: Learning Styles & Trading
Article 8: The Act of Learning & Becoming A Consistently Profitable Trader
Article 9: Cognitive Dissonance Oh My!
Article 10: Concluding Article Series
Profitable trading to all!
FxST Education Specialist
Dr. Debbie Badawi’s formal education, training, and career is in the field of education. Ten years ago, upon an early retirement, she entered the world of trading equities and then found her passion in day trading and swing trading the Forex Market. Although she trades various currency pairs, she spends much of her trading focus on the EUR/USD. In addition to trading, Debbie mentors other traders, works with the team at FXST, and runs her educational consulting business where parents find educational solutions for their children. When asked what’s next or what’s Debbie’s future? Debbie smiles and precisely says, “ a simple life comforted by a six figure income and a financially free retirement.”