How to trade in the right way ( Binary option risk )
When asked about his success, Warren Buffet (multi-billionaire) answered that he never invests in things that he doesn’t understand. Although speaking of assets, this statement qualify to all aspects of the investment act. Intro to trading psychology
So you shouldn’t start trading before you know a little bit about yourself – the more experience you gain in one, the more insights you will gain about another. Becoming an emotionally intelligent trader
Nevertheless, the importance of knowing yourself is important for an even bigger reason. Financial markets – are ruled by the traders, each and every one of them is a person not unlike yourself. Learn about what makes you tick, and you have an insight into how others will respond in a similar situation. The better you can understand the single trader the closer you are to understanding and even predicting the next market movement – the movement of the masses.
- Trading is a skill of the mind, you need to know who you are:
Are you an active person or a passive one?
- Would you consider yourself as an aggressive person?
- Are you trading for the financial reward (goal oriented) or the enjoyment of the trade itself?
- Is it all about glory for you?
All of these should affect your decisions; otherwise you will be forcing yourself into an affected behavior rather than concentrating on the actual trade.
An active trader
Will mostly look for shorter term trades like:
These depend on news-driven fluctuations, living for the immediate excitement and living the life of a day trader.
A passive trader
will seek longer-term investments in company shares that fluctuate upon quarterly reports and relatively rare corporate events – he/she may even trust his/her portfolio to an account manager or investment adviser The day trader will invest with the trend, immediately closing a position that goes against expectations.
The long-term investor however will rarely examine the bottom line, except at rare cases, when higher profits over the long term look promising, if he believes that markets generally rise.
So, what kind of a trader are you?