Trading Psychology

Perfectionists Aren't Great Stockmarket Traders


I'm going to make a bold statement. Perfectionists aren't great stock market traders. Interestingly enough, I'm sure statistically speaking, a large portion of share traders would be perfectionists at varying degrees. Why? Trading requires characteristics like excellence, attention to detail, discipline and persistence to succeed.

A Short History of Insider Trading In Australia


Insider trading breaches has surged according to an ABC interview with Australian Securities and Investments Commission (ASIC) deputy chairman Belinda Gibson. ASIC claims that it is receiving 200 alerts a day in relation to suspicious trading activity relating to the usage of privileged information not available to the public. There have been more insider trading breaches in the past three years than in the entire previous decade.

Insider Trading: Greed


The world of insider trading was brought to light recently with the court case of John Hartman, an ex-Orion equities dealer. Hartman had been sentenced 4 and a half years jail and a non-parole period through to December 2013. The sentencing judge Justice Peter McClellan had said that, "Paying $350,000 to a … graduate in his early 20s carrying out a task of modest responsibility underlines the extent to which the values which underpin our society can be compromised".

The Psychology of a Rogue Trader


There have been quite a few rogue traders who have made the news over the past few years. There's a list of rogue traders below which includes well known names like Nick Leeson and Jerome Kerviel, along with the millions or billions of dollars which they’ve lost their companies as well as their penalties. A rogue trader is a professional traders executing unapproved or ill-advised financial transactions. But why do traders go rogue? What turns a trader to the dark side?

Psychology of Trading: Personality Traits


Trading is not just about numbers, trading systems and having a trading edge. Since we’re human (and we aren't using mechanical high frequency algorithmic trading) we have to contend with our psychology while we are trading. You've probably heard or been told many times that it is important to trade the markets as emotionless as possible - just like a robot. Trading must be a boring process of executing your trades.

Desperation Trading: Desperate Trading, Desperate Measures


I'm sure that we've all been desperate at some point in time. Sitting in front of your trading screen, with a series of losses, you'd be tempted to try and claw back some of your losses. Unless you've totally perfected trading like a robot and are totally and utterly emotionless, you would have felt this emotion at some point in your trading career.

Avoid Low Probability Trading


Don’t waste your time by low probability trading. After share trading (or trading other types of markets) you'll learn that some types of trade setups tend to pay off more often while others are duds and end up playing psychology games with your mind and waste your emotional energy. One example of low probability trading is picking tops and bottoms.

Characteristics of Successful Traders


Psychology and intelligence plays an important role for successful traders. It is imperative for struggling and unsuccessful traders to overcome their weaknesses to win by trading the share market.

In terms of necessary intelligence skills, in Turtle Trading, the candidates were tested for their mathematical aptitude as well as the ability to think in terms of risk and probability. Finding an edge in the market and learning whether a trade is worth trading and risking your capital requires a little mathematical skill.

Traits of Successful Investors and Traders

What is the True Value of Trading to Society?


When I first started trading during my university days, I remember pondering about the true value of trading to society. I was studying engineering at the time and I saw my friends graduating to become engineers, bankers and lawyers. I personally saw that engineering was possibly one of the most noble of careers, since of course there is a direct contributor to the improvement of living standards of society (think computers, roads, bridges, plumbing, electricity, gadgets, cars and so on). Each and every occupation out there has a purpose for society. But what about trading?

Utility Calculations in Your Trading


I suffered a major trading loss recently and I was pondering about my profit and loss calculations. For example, a trading account can start at $500 and be traded up to something like $2000. So that’s a 300% profit on your initial investment. However, what if you have traded your account all the way up to $4000 (or have started your account at that figure) and found you’ve literally burned that trading account down to zero – in your books that would account for a 100% loss.

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