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Psychological and Biological Factors - keys to trading success

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  • Psychological and Biological Factors - keys to trading success

    I decided to start an important new thread here on Psychological and Biological Factors in successful (profitable) trading.
    We see it time after time. Poor decisions. Even from experienced and seasoned traders.
    So I have studied this a lot, reading articles, watching YouTube documentaries, all while I am in front of the screens trading my manual strategies.

    I am going to start a list of resources that have helped me immensely, and I hope you add to the list:
    1. "Overcoming Self Doubt"
    2. Documentary on Trading Psychology and Case Studies on Decision Making
    3. "the hour between dog and wolf" by John Coates
    4. "the biology of risk" by John Coates

  • #2
    1. Janice Dorn, M.D., Ph.D. @ her article entitled "This is your Brain on Trading" -- see Page 5 and 6 specifically
    2. Also.... John Coates speaks much and researches much about this field of "NeuroFinance". Some of his research can be found on the insightful video above at Point #2.

    Much of the academic finance theory is based on the assumption that individuals act rationally and behavioral finances treats investors’ choice based by behavioral biases. In contrast, neuro-finance (as a blending of psychology, neurology and finance) attempts to understand behavior by examining the physiological processes in the human brain when exposed to financial risk. Scientists map the mind to learn how fear and greed drive the financial markets. The paper, will briefly present why neurofinance is important and how will be able to provide in the near future a number of effective tools for improved financial decision making.


    • #3
      I think that this is very useful topic to think about. Not so many traders are aware of all psychological aspects that exists on financial markets. Sometimes learning how to control your emotions while trading can make distinction between profitable and lose deal


      • #4
        Indeed, many people think that the market is just your knowledge, but forget that the main enemy of a trader is panic, excitement, anger, aggression.
        And what to do with it? Very few traders understand what to do with it.


        • #5
          Before you start with the psychology of a trader, you can start with general psychology, because we are first of all human beings, and then traders. But in general, it is interesting, especially when you read about which parts of the brain are connected with excitement, making analytical decisions, etc.


          • #6
            The books are really useful, because traders really often forget about the fact that one should not only be interested in the news and the economic calendar, but also in everything connected with the market.


            • #7
              A trader's success depends on himself: whether he is ready to become successful or not. It is always worth remembering that there is no quick way to achieve success. There is no easy way to financial freedom. Everything that a trader does requires physical and spiritual dedication, certain sacrifices and efforts on his part. The way to success of a trader is profitable trading, and firm determination is the key.
              The first thing a trader must accept is that nothing can be known in the market for sure.
              There are no methods of technical analysis, which could predict the price movement with the accuracy of 100%. This happens because the market moves due to human psychology. The desire for profit, fear of losing your funds, panic, as well as other feelings and emotions affect the movement of the market.
              Despite this, the market has "memory". Price movement is repeated from time to time, it allows a trader to understand market behavior and create tools for trading analysis. Thus, the most popular methods and tools for technical analysis, various forex advisors and indicators have appeared.
              The Forex market is neutral. Only traders give special meaning to each price movement. They interpret market conditions in accordance with the experience and knowledge they have gained. However, in fact, the Forex market remains neutral.
              But understanding and accepting the fact that Forex is neutral frees a professional trader from problems caused by his confidence.