Indices Trade Psychology: Emotions Fear and Greed

Greed

Most investors/traders aren't satisfied with 20%-40% profit annually, what these traders/investors want is double or triple their trading equity.

With the right strategy, the market can certainly be profitable but greediness is always a factor in any human endeavor, especially in investing. Greed in Stock Index leads to over trading. When a trader falls in to this trap, there's a greater potential to risk too much. Greed is the one thing that can cloud your judgment faster than anything else. This is where self discipline can help you as a trader to maintain your focus when trading, traders will need to use the correct forex trading psycology principles so as to maintain the required discipline while trading the markets.

Indices Trading Psychology Greed in Markets

Transforming Your Psychology Mindset To Improve Your Trading

Indices psychology - teaches you how to fight your greed & set realistic goals. Greed is what makes most traders to lose. Profit is never enough. Everyone wants to earn more money. Well, some traders do succeed once or twice. That is called good luck. But short term profits mean nothing. If you concentrate on proper money management in the long term you will keep winning.

A good principle is, not to use more than 5% of the margin, and not to risk more than 2% on any one single trade transaction.

Fear

Fear is another emotion in psychology which affects the market. Poor practices, such as taking on too much risk with excessive number of trades can magnify the normal tress of the market place. The best way to combat fear is to learn and understand how emotions affect the markets and learn how to avoid these emotions when trading the market.

Identifying longterm trends can improve results, identifying these trends can help you as a trader plan the best trading strategy so that you as a trader can maximize profits, while at the same time keeping the emotion of fear at bay.

Sometimes, however, psychology problems have nothing to do with your strategy. They are the results of pre-existing problems that won't be solved by different strategies and methods. Your biggest/largest enemy when trading is you. It isn't the market or the brokers. It is you! If you don't have a professional Indices mindset then you will make the wrong decisions and lose money on a consistent basis.

Stock Index psychology teaches courage. In it takes a lot of courage, patience & experience to make huge profits.

Hope

Hope can cause investors to make mistakes when it comes to decisions, especially when it comes to staying with a losing trading position for too long. Exit points exist for a reason and losses should be kept to a minimum.

The market might & may be driven by emotions but it also can be predicted: because it has ALWAYS been driven by the same basic human emotions.

Stock Index psychology - is based upon how well you as a trader know yourself to be able to profit from your strong points, as well as control you weak ones, it has a lot to do with how successful you will be when it comes to investing. When you truly know yourself, then you are aware of how you're going to react under certain circumstances and you as a trader can protect yourself from self-damaging actions or decisions when it comes to managing a trade.

The right mindset can be a tool which can help an investor control & predict their emotions so that they're able to make correct decisions based on facts. The lack of this market psychology can be a hindrance to success since the movements of prices are pretty unpredictable.

The right psychological outlook can help traders face the issues and make sound decisions in the end. There should be a balance among all the various aspects of trading which determine whether a trader will be successful when trading.

System Mindset

This is a part of the Indices Trade Plan about mindset

MINDSET/PSYCHOLOGY

Invest without Emotions (greediness, fear, anticipation, impulse, bias, over-excitement)
I trade what my eyes see not what I feel.
I'll be patient.

My job isn't to be the trade system!

It isn't to decide which signals looks promising & which does not.

That's the job of my trading system. My system has a set of trade rules which tell me this is what I follow. Do not get caught up in price action & make your own rules and strategies as you go along.

MY JOB IS

To sit patiently and wait for my system to indicate that it is time to enter or it is time to exit. And then with great focus I execute my strategy as planned.

Taking trade transactions not given by the trading system, second-guessing system and not taking those given, hesitating and getting in late, anticipating & getting in trades early are all common-place and boil down to lack of faith in trading strategy & not having a burning desire on accurate trade execution.

GOAL: To have 100 % undivided focus on mastering the ability to execute my system accurately.

More you master your ability to step back from price movement & watch market dis-passionately, waiting for a trading signal, easier it will be to witness the fluctuations/oscillations of your emotions without you getting sucked into them and allowing them to throw you off your game.

WEAKNESS

I am greedy.
I over-trade
Make a listing of all your weaknesses that are interfering with your strategy. This is the first step to help you as a trader to overcome the weak-nesses. Use trading psychology to help you overcome them.

Note: by writing down your weaknesses you'll begin recognizing them as you progress, once you do this you will begin to avoid these mistakes and your trading results & profit will improve.

To learn and know how to write down these guidelines on your trading plan, read the Indices plan tutorial at the key concepts tutorial section.

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Trade Stock Indices

Indices Trade Psychology: Emotions Fear and Greed

Greed

Fear

Hope

System Mindset