Linear perception of reality torn


Psychological aspects of the market

Reality of being refracted

Much has been said and written about the importance of psychological factors in the market. But the only real trade can identify gaps in the psychological preparation of the trader to show the direction in which it should develop. Everything else - the tinsel, it's just talk about the market, people who love to lead, never worked in the market, and nothing in it will not work. We need to understand who we are, to understand their feelings at risk. Each time earning money, you have to be very careful indeed and very ironic to yourself, you will have no peace - because not to do so, the next day we tend to lose more than earned.

Why is this happening?

The problem lies in the fact that people take time for granted, not thinking about its meaning. And the meaning is, that every day, every hour there are any developments. We are planning an action plan, it looks like some straight - but here it is distorted omnipotent time as distorted vision of his subject when immersed in an environment with different refractive index, such as a teaspoon in a glass of water.

Built-built, and finally ...

So it is with the future. We draw a straight line, built of bricks buduschee past, but <identify> desired result can be only with big assumptions. And to this, we should always be prepared, especially if our work is totally dependent on the changes made by time. It will add something we did not expect. Even with the correct prediction will be very difficult to manage the situation, because it is always unpredictable.

Similar happens in a situation where we, traders, plans of action on the assumption of a pessimistic scenario. But the problem is that most traders to worst-case scenario, as a rule, do not reach. Around the middle of the path, instead, quietly preparing for the negative option, take a stop loss exit the position and so on, the trader starts bolder look ahead and not think about the alleged worst, and that the end of it.

Time tracking and self-

By the way, thirty top U.S. traders, when asked what they see as the most difficult in his profession, answered the same way: it is not the technical skills, no understanding of markets, and discipline. It was her weakness interfere with trading plan outlined earlier. Night - the worst time for the trader. If you receive a call at night with the information that somewhere something has moved, and you need to make a decision <on the go>, remember - such a decision, as a rule, is not rational. Something happens constantly knock you from the initial course of action. In general, this is a serious problem - a lack of discipline. Our perception of the linear, but a reality, to put it mildly, somewhat ragged.

Another aspect more mathematical. To make any prediction, it is necessary to take the historical data for the period of interest to us as long as three times. For example, when Khrushchev, based on the growth rate over the period from 1945 to 1960-th years, came to a very optimistic conclusion that communism in the Soviet Union to build a 1980-mu, was incorrectly selected period. Of course, do not want to scale it up to war and destruction ...

In trading, it happens every day - to include in the analysis of less than the required spacing, and come to an incorrect evaluation. Taking a short period in reyndzhe, people buy, sell, and then they were allowed out of the range, and they are losing the basic amount of money.

People tend to confuse the scope and hope for the best, and to persist in their errors. And when small waves overlap large trader reaction is not always adequate. To overcome this very difficult from a psychological point of view.

So Vehicles, but not work on himself, without an understanding of the psychology of trading in the financial markets and the ability to monitor themselves during this work - success should be expected. We wish to the contrary.

Footnotes: * Prepared by Simon Vine speech at the Second International Conference and Exhibition <Internet Investor EXPO>, held October 1-2, 2002 in Moscow.