Showing posts from December 2, 2016

Know When To Use Your Head Or Listen To Their Heads

When we analyse a trader’s brain—it is no different from an average human brain! Do you trade emotionally? Or do you consider yourself to be a logical trader? Traders’ psychology–irrespective of their trading strategies–can be traced along a spectrum of absolute emotionless logical thinkers to those who base their trades on emotions. Striking a balance between the two is what most traders struggle with. An ingrained fight or flight response is a part of who we are as humans. In the investing world, this feeling of fear or greed is called a gut-feeling or a trader’s instinct. A trader might have a certain inkling—irrespective of an independent tip or a relationship manager’s advice—that the stock that she/he has invested in is going to soar or drop—that is part of emotional trading. Emotions are not only limited to an individual when we talk about the stock market behaviour. All the markets are governed by collective emotions of traders as a group. There is a school of thought that consi…