Get started

Fear

Emotions in Trading Performance: Overcoming Fear, Greed & HopeThe Impact of Emotions on Trading Performance: Overcoming Fear, Greed, and Hope Introduction: Emotions significantly influence our decision-making process, which holds true for trading as well. During trading, our emotions can either be advantageous or detrimental to our performance. The Role of Fear: Fear plays a crucial role in trading. When fear takes hold, traders may hesitate and avoid necessary risks, ultimately missing out on profitable opportunities. Unfortunately, fear can lead to impulsive decisions rather than careful analysis and adherence to a well-thought-out trading plan. Consequently, managing fear effectively is crucial for success in trading. By cultivating emotional control, traders can make objective and rational decisions based on trading strategies and market analysis. This disciplined approach will enhance trading choices and overall performance. The Impact of Greed: On the contrary, greed-driven behavior can also have a significant impact on trading outcomes. Greed often arises when traders become overly fixated on making quick money. Consequently, they may take excessive risks or hold onto losing trades, hoping for a miraculous turnaround. This behavior, fueled by greed, often results in substantial losses. To overcome the negative effects of greed, traders must adhere to their risk management strategy and avoid impulsive decisions. Disciplined trading based on sound judgement and strategic planning is crucial to long-term success. The Influence of Hope: Hope is an emotion commonly experienced by traders. It fosters optimism and a desire for positive outcomes in the market. However, hope can also lead to biased decision-making and unnecessary risks. Traders may hold onto losing positions for longer than necessary, hoping for a reversal that may never come. To counterbalance an excessive reliance on hope, traders must maintain objectivity. By implementing a rational approach and sticking to their trading plan, traders can make well-informed decisions that reduce the impact of hope on their trading outcomes. Real-Life Examples: Let's examine several real-life examples that illustrate the impact of emotions on trading performance. Example of Fear: Consider a trader who invests in a stock, only to learn about negative news regarding the company. Fearing losses, the trader hastily sells the stock at a significantly lower price without conducting thorough analysis or assessing the company's long-term prospects. In this instance, fear overrides sound judgement, leading to impulsive decision-making. Example of Greed: Imagine a trader who experiences a series of successful trades, resulting in substantial profits. Driven by greed, the trader becomes overconfident and deviates from their risk management strategy. By taking on larger positions and increasing their risk exposure, the trader encounters a significant loss that erodes their previous gains. Example of Impulsive Behavior: Consider a trader who identifies a potential trading opportunity but enters the trade impulsively without proper analysis or confirmation. This impulsive behavior, driven by emotion rather than a well-defined trading plan, results in an unfavorable outcome and monetary loss. Strategies for Emotion Management: Successfully managing emotions during trading is vital for consistent and sound decision-making. Here are some effective strategies: Recognize and acknowledge emotions: Be aware of the emotions you experience while trading, particularly fear, greed, and hope. Recognize that emotions are a part of the process, but they shouldn't dictate your decisions. Stick to a trading plan: Develop a comprehensive trading plan that includes entry and exit strategies, risk management guidelines, and profit targets. Adhering to this plan will minimize the influence of emotions on your choices. Practice discipline: Exercise discipline in all aspects of trading. Avoid impulsive actions driven by emotional impulses and the fear of missing out. Stay committed to executing your strategy consistently. Set realistic expectations: Understand that losses are inevitable in trading, and not every trade will be a winner. By setting realistic expectations, you can avoid excessive disappointment or overconfidence. Take breaks and manage stress: Trading can be stressful, amplifying emotional reactions. Take regular breaks, engage in stress-relieving activities such as exercise or hobbies, and maintain a healthy work-life balance. Seek support and education: Surround yourself with a supportive trading community or seek professional guidance. Continuously expand your knowledge through trading education, which will help you manage emotions effectively and enhance your trading performance. Maintain a trading journal: Keep a journal to record your trades and the emotions you experience during each trade. Reflect on the impact of these emotions on your decision-making process, and use this self-reflection to identify patterns and develop strategies for better emotional management in the future. Conclusion: Emotions have a significant impact on trading performance, and understanding how fear, greed, and hope affect decision-making is crucial for success. By implementing effective emotion management strategies such as discipline, a well-defined trading plan, and self-awareness, traders can achieve more rational and objective decision-making, ultimately improving their trading outcomes.
NSE:BANKNIFTY
by sbkurandwad77
NIFTY with a GAP down.HOW TO TRADE IN NIFTY . Nifty is making a bullish candle and global market is bullish but as corona cases are increasing, the market will be bearish. behind the scenes: FII BOUGHT 437CR DII BOUGHT 657CR. EUROPEAN markets are flat. SGX nifty is trading bearish at the time of review Advance to decline ratio is around 1131:762 in Nifty50 US market data is bullish Crude oil is trading at $62.92 bearish Gold is trading at 1778 with bullish view US 10yr bond is flat at 1.566 bearish Dollar index is also flat 91.65 bearish OI For Nifty for the lower side are 14,600/ 14,500/ 14,400/14,000 OI for nifty on the upper side are 14,700/ 14,800/ 15,000/ 15,500 Maximum OI at 15,000 Max pain at 14600 market price 14617 what to expect: Market may show a bull run if crossed 14645 how to trade today: 1. Gap up opening first possible resistance 14682 second 14733 third 14788 2. Gap down first possible resistance 14574 second 14519 third 14471 fourth 14354 expecting a gap down 3.flat opening 14646 is a crucial level to watch This is an educational analysis no call is related to it
NSE:NIFTYShort
by Mantubora
Nifty will troll as investor wealth will fall. EXHAUSTION GAP IN NIFTY. NIFTY 14/04/21 gap will opens higher and closes lower, leaving a large red-colored candle, depicting a tremendous amount of selling. Notice how the price action shown in this chart is trending higher prior to the exhaustion gap, and the gap and following price drop appear to break the most recent trend. Whatever was driving these buyers to purchase the stock at these prices was drawing the attention of many potential investors. Once the price reached its highest level, then it was as if there were simply no more buyers to push prices higher. Corona factor build up fear in investors and people started exiting their position. The principle behind an exhaustion gap is that the number of likely buyers has diminished and sellers have aggressively stepped into the market. The buyers may be largely exhausted implying that the upward trend is likely about to stop as sellers take profits from a previously extended rise in the price of the stock. The exhaustion gap has three particular features. 1. Several weeks or months of upward trend in the share price of a stock. 2. A sizable gap between the lowest price of the day previous and the highest price of the most recent trading day (roughly half the range, or better, of an average trading day for that stock). 3. An above average degree of trading volume taking place on the current day. When these three components all exist in a two-day price pattern, it is usually referred to as an exhaustion gap and technical analysts expect that this signal implies prices will trend lower over the days and weeks ahead. Exhaustion gaps can be difficult to identify and may be easily confused with runaway gaps. EDUCATOIN PURPOSE
NSE:NIFTYShort
by Mantubora
3
INDIA VIX - OPTION SELLERS BEWAREVolatility is back in the markets after a while and does not look like it will cool off anytime soon. Another series of spikes is expected which can take INDIA VIX to 25. Weekly chart of the volatility index shows the range between 16-25 for coming months. High VIX = Inflated premiums on option contracts. For beginners , India VIX is a volatility index which measures market expectations of near term volatility. It indicates the investor's perceptions of the market volatility in near term and is based on Nifty OTM options. Higher the India VIX values, higher the expected volatility and vice-versa. As the volatility index rises, one should become careful as the market can steeply move into either direction - Animesh Vashisht
NSE:INDIAVIX
by Vashisht_CFTe
2
Manage Greed And Fear with Simple TechniquesTwo serious problems in trading, which each one of us has faced at one stage or the other -- Greed and Fear. Most of us are still struggling with these issues. According to Wikipedia Greed is an inordinate or insatiable longing for unneeded excess, especially for excess wealth, status, power, or food. Simply put when the trader do not take profits at predefined targets and wait for more, he is getting greedy. Many a times such trades reverse and either the whole profit is gone or the trade becomes negative. Once burnt twice shy, besides other factors, greed also breeds fear. According to Wikipedia Fear is a feeling induced by perceived danger or threat... which may cause an ultimate change behavior. In trading it is the fear of loss which hampers performance. Many a times best opportunities are missed due to fear and sometimes fear induce us to get out of a trade too early. As the stock approaches the stop loss, the fear factor orders our brain to get out before (that carefully predefined) stop loss level is hit. It is said that practice makes us perfect and there is nothing wrong in it. But it would need years of practice before we are perfect in managing greed and fear. I am hereby giving very simple techniques which we may practice every day without even getting into a real trade. Basically these techniques are brain exercises which may improve our cognitive functionality. We may call this technique TRAIN YOU BRAIN . The basic idea behind these exercises is that the motivation to think stimulates motivation to do . The Exercises: First we should sit in any relaxed position in a quite environment and do simple breathing. Close your eyes and just concentrate on your breathing as you inhale and exhale. It's important not just to breath but to feel it too. Do the above exercise for 3 to 5 minutes (or higher if you want to). This exercise will prepare the ground for the next main step of the exercise. Now keep your eyes closed and imagine your favorite setup on your favorite time frame. It could be triangle setup; a flag; a moving average setup or any other which you think can be reliable for trading. I would suggest not to imagine more than two setups. Imagine a stock has made your favorite set up and you are ready to trade it. You know your profit targets and stop loss. In the first attempt let the trade go in your favor. Always and always take profits at targets or trail as you like. When this imaginary trade is finished, repeat this process with the second setup. Do not go too far with your imaginations, I mean do not imagine that you took a stock at 200 and sold it at 500 on same day. I don't know why but It reminds me of the Inception movie :D When we say a setup, there is a fixed target to that set up and there is a fixed stop too. So dun let your imagination make you a millionaire on the same day. Repeat the above exercise, in which trade goes in favor, four times..two times with each setup. The advantage of this exercise will be that the brain will be trained to take profits at predefined targets and you will be able to manage a profitable trade in real life. When it's done, on fifth attempt let your favorite setup trade go against you. Let it ultimately hit the stop loss and you suffer the loss. Remember not to exit the trade before that setup stop is hit. Repeat it with your second setup. Repeat the above process 6 times, means 3 times with each setup. This exercise will help in managing fear of loss, which is perhaps a greater enemy than greed. The combination of these two brain exercises will surely help you in overpowering greed and fear and hence improve trading in real life. I suggest you not perform these exercises during market hours. For better results, do these exercises in the evenings or in the morning. Rome was not built in a day so do not expect extraordinary results overnight.
NSE:NIFTYEducation
by Bravetotrade
10
Share Trading: Is it a Better Business ?? For Whom ???Put 10k in the market, buy stocks worth 50k or more on leverage and sell at 1k profit which is 10% profit on the investment capital..That's amazing!! Isn't it? The bad part is, the anomalies to this hypothesis adversely impacts more than 90% of time. And the so called 'better business' turns out to be a losing affair for more than 90% of our trading community. Let's first discuss about our losing 90% trading community: A beginner takes his first trade on hunch and wins.. beginners luck..builds confidence..takes second trade and wins..no fear..may be he wins a couple of more and the beginner increases the trade size..over confidence and greed..he starts losing and bursts his account in aggressive attempts to win back profits at first and regain the losses lately. What went wrong with this beginner? Greed prevailed rationality Lack of strategy or Edge in the markets Revenge attitude What about the remaining less than 10% of the trading community? The most successful ones start with a predefined strategy..primary reliance on trade management..patterns and techniques come next..backtesting the strategy..paper trading..followed by real trading..flexible approach as far as the edge in the market is concerned..no fear..no greed..just exact plan execution. So what makes these 10% better over the others? The answer is..some important traits. Let's briefly discuss some of these important traits. Trade management Pros are always ready to miss a trade not qualifying the pre defined risk to reward ratio. Normally 1:1 RRR is good, 1:2 is better and anything higher than that is the best. Not only RRR but trade management also involves trade sizing which is a subset of RRR. Suppose I want to take max. risk Rs. 1000 on a trade. On a particular set up, my stop comes out to be 2 points on a 200 Rs. stock. In this case my trade size would be 500 shares..just an example. Edge in the market OR the strategy which tells where, when and why to buy or sell. It could be a candlestick pattern or a combination of patterns. It could be an indicator buy or sell signal. The key here is to have patience for the signal. If there are multiple confirmations confluencing at the signal, it would be a high probability setup. Our Edge in the market and trade management then go hand in hand to make our day. No fear no greed According to best practitioners it's good to take some profits off the table at first predefined target. B'coz no matter how high probability the set up is, there are always some chances that it could turn out to be a loser. Remaining position can be trailed for substantial bonus gains. If a trade does not go in favor at first instance, just get out at predefined stop without extending losses. Suppressing greed would definitely improve win to loss ratio. Greed kills but fear is a psychological breakdown. Fear bores over-protection in the trader. The trader may miss several best setups due to fear of failure. A beautiful trade missed is as painful as a losing trade. It has been observed that simple breathing exercises have significant impact on our cognitive functionality, which helps in overcoming fear of taking calculated risks. So who can teach the trader the cannons of best trading practices? No one but the trader himself. Of course a good mentor can make things less difficult but it all comes with practice and experience. However, the fact is that, most of us would not learn unless we lose some or most of our hard earned money. Although I deliberately missed some concepts due to time and space constraints yet I hope the brief discussion highlighted important points concerned to share trading. Do hit Like and comment. Trade safe, be healthy. Regards Bravetotrade
NSE:NIFTYEducation
by Bravetotrade
14