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When it comes to investing or trading, your mindset is one of the most important things that play a part. How does psychology impact trading? Discover the factors that can influence financial decisions – personality, emotions and moods, biases and social pressures. We unpack these in this series, Trading Psychology, brought to you by IG.
45 Episodes
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If you are having trading fatigue and are looking for ideas to stay inspired and trade financial markets with confidence, you’re tuned in to the right station! So how do you find inspiration? One easy way to look up to your trading heroes. If you don’t already have trading heroes in mind, seek traders you relate with and who you can emulate, in terms of their methods, but more importantly, their mindsets.See omnystudio.com/listener for privacy information.
When it comes to trading outcomes, especially when things go south, we often try to identify the cause and more often than not, attribute blame. This is perhaps one of the most difficult lessons to learn in your trading life. If you do not take responsibility for your own actions, then your trading ability will probably never improve.See omnystudio.com/listener for privacy information.
Before you can triumph, you have to try. But what motivates you to try in the first place? Inspiration can be elusive, but good traders know not to just sit back and wait for inspiration to come along. Rather, they go looking for it – and once they find it, they nurture it. But what is inspiration exactly, and can it help your trading?See omnystudio.com/listener for privacy information.
We’ve talked previously about how positive affirmations can make you a better trader. But what’s the catch? Is there some fine print somewhere? Keep in mind that this is one of the areas that responds to consistency. Research suggests that affirmations are the most relevant and effective if you use them before you end up in real trouble. See omnystudio.com/listener for privacy information.
We’ve talked about the power of positive affirmations - where believing in your capabilities and goals helps you achieve them. Here’s an example of how you can make your positive statements even more effective with just a few alterations. See omnystudio.com/listener for privacy information.
Self-belief sets the professionals apart in every endeavour. If you weren’t lucky enough to be born with a high belief in your own abilities, there are still ways that you can cultivate this enviable quality. One of the ways is using affirmations, which can guide you toward your goals.See omnystudio.com/listener for privacy information.
One thing professional athletes and good traders have in common is understanding the value of a solid recovery plan. Looking after both your physical and mental health is important for handling the booms and busts. For effective recovery, you should tap the power of positivity.See omnystudio.com/listener for privacy information.
Rationality in trading is the ability to make choices that will result in the best possible outcome given the information available. Rational decisions aim to maximise an advantage, while minimising any losses. Although rationality is all about seeking the optimal outcome, studies have been quick to point out that this doesn't always mean making money – a rational decision can involve minimising losses and even accepting a loss.See omnystudio.com/listener for privacy information.
Every trader requires a certain level of confidence so that they can identify and act on opportunities, as well as bounce back after a losing streak. IG's survey found that investors and traders had higher levels of confidence when it comes to financial decision-making than non-investors. But there is a difference between confidence and over-confidence, which is an unrealistic view of one's abilities. See omnystudio.com/listener for privacy information.
In trading, like in life, your personality can be a driver of what you do and how you do it. One big area that affects how traders make certain decisions is their decisiveness. This is the ability to identify opportunities and act efficiently – it includes making decisions about when to enter and exit trades, assimilating new information into a plan and learning from mistakes.See omnystudio.com/listener for privacy information.
How patient would you describe yourself to be? That’s one of five key areas of personality that you can work on to help maximise your trading results. In trading, like in life, your personality can be a driver of what you do and how you do it.See omnystudio.com/listener for privacy information.
In trading, like in life, your personality can be a driver of what you do and how you do it. Successful traders recognise when their personality traits could predispose them to make certain decisions and take conscious steps to ensure that their results aren’t being compromised. Here’s a look at five key areas of personality - discipline, decisiveness, patience, rationality and confidence – and how you can work on them to help maximise your trading results.See omnystudio.com/listener for privacy information.
Successful traders create their trading plans to help set themselves up for success. A trading plan is essentially a framework that guides traders through the entire trading process. It sets the conditions under which a trader enters trades, identifies markets, exits trades and manages risks along the way. See omnystudio.com/listener for privacy information.
When it comes to the process of trading, having a consistent trading strategy cannot be understated. This is because uniformity leads to sensible trading decisions, but building an edge in the market has more to do with a consistent method you are comfortable with. We look at some of the steps you can take.See omnystudio.com/listener for privacy information.
JOMO - or "joy of missing out" - is an important concept for traders, emphasizing the need to take a step back, think, plan and enjoy, rather than rushing into trades due to the anxiety of missing out. There is no single way that JOMO in trading occurs, but it is generally discernible in calm, confident traders – those who are happy with their own strategies. Don’t fear missing out – embrace it! Here are seven steps to turn your FOMO into JOMO:See omnystudio.com/listener for privacy information.
FOMO vs JOMO: that one letter makes all the difference. JOMO substitutes ‘fear’ for ‘joy’, suggesting that not only is it OK to miss out – it’s actually something to be relished. JOMO is an important concept for traders, emphasizing the need to take a step back, think, plan and enjoy, rather than rushing into trades due to the anxiety of missing out. JOMO has been described as the ‘emotionally intelligent antidote to FOMO.’ JOMO in trading embodies calmness and discipline – traits that serve traders well. See omnystudio.com/listener for privacy information.
Are your money scripts holding you back? Money scripts are often inherited from your parents and grandparents. It’s like the script written in a play that has been passed down to you - it involves the way you talk to yourself about money and can affect the way you think about trading.See omnystudio.com/listener for privacy information.
Learning how to manage your emotions is critical to achieving that, because trading emotionally can hamper your success. One way to keep your emotions at bay is to keep a trading log. Doing so will enable you to record all your losses and wins, as well as the emotions that you were experiencing during that particular trade. See omnystudio.com/listener for privacy information.
Just as important is to quit while you’re ahead and take your winnings. A succession of wins or one particularly big win can make you feel invincible, and that euphoria could subsequently make you rush into another position to try and do it all over again.
See omnystudio.com/listener for privacy information.
Sometimes after a loss, the best thing you can do is walk away from your trading account for a short while to gather your thoughts and compose yourself – rather than rushing into another trade in an attempt to regain some of your losses. The best traders are those that take their losses and use them as learning opportunitiesSee omnystudio.com/listener for privacy information.
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