Something we often hear about, but no one has ever given a truly plausible explanation for, is the psychological factor and how it can actually affect our performance in the financial market.
But to what extent is this real? Can we really be influenced by our thoughts? Could this be what is behind our gross mistakes and lack of control over our finances?
Yes and no.
When analyzing the performance of professional traders, we find that they make mistakes just as much as any amateur, differing only in the type of market they operate in.
Traders who made history in the financial market trade or traded mainly in the derivatives market, where risk can be perfectly calculated, also leading to limited returns.
Those who really made history in this market had amounts of money far superior to mere speculators or the so-called “sardines,” so they did not need to earn income every day to ensure the payment of their bills
.
This gives a margin for greater possibilities of errors, as you can make mistakes in almost all orders as long as you get a single good order that pays for all the mistakes made previously, and you will still be growing your resources.
The difference is that for this type of modality, you will need superior skills and knowledge in many subjects, which is not the reality for the vast majority of market speculators who need immediate money daily.
Now let’s talk a little about those who take great risks, the day traders: This “breed,” which more closely resembles aliens, I say this because it cannot be extremely normal to take so many risks, puts us in a privileged position compared to traders, not because they make more money, but because they lose a lot of money. The true “blood in the eyes” or those who constantly need to prove to themselves that they are the best at what they do, because if they are not, they will gain nothing.
Their earnings depend solely and exclusively on themselves, and there is nothing more you can do to change that. It doesn’t matter if you studied at Harvard, if you are a doctor or an engineer or a super mathematician: In the financial market, you will be fighting for a place in the sun with people who have great professional qualifications in various areas and also with people without any kind of education, and often the simplest and least knowledgeable people will occupy a prominent place, and you will just be lamenting the losses you have suffered.
But why does this happen? This is what we seek to understand and comprehend through analysis and studies to know how much the psychological factor influences our decision-making.
In addition to obtaining all possible knowledge and expertise and developing new operational techniques, what is unanimously said is that more than 80% of the success one can have in a day of victories is entirely linked to the type of psychological preparation we have. So we ask: If 80% of our success is guaranteed by our psychological preparation, why do the other 20% often drain all our money?
And this is where things get interesting:
I found a detailed article about airplane accidents that evaluates the reaction and action of pilots in moments of crisis and how this influences decision-making and whether their actions will result in a serious incident that, in the vast majority of cases, results in the death of all occupants, or if it will result in the pilot being hailed as a hero for avoiding a great tragedy:
Studies show that overconfidence, mainly because in other occasions an action taken ended up resulting in success, the pilot tends to act the same way again and stop following the protocol or guidelines about the aircraft.
This clearly demonstrates that in a profession where it is necessary to take such high risks, the majority of professionals tend to act according to the confidence they possess.
But remember what was said earlier: It doesn’t matter your education, your age, or how good you are at something you do, in the financial market your qualities should be considered nonexistent if you want to succeed.
Every day we have to understand that we know nothing and, in a matter of minutes, understand what is happening and, if this is indeed clear, follow our protocol or appropriate strategy to do our job.
Notice that it becomes clear that, in moments of risk, we are extremely and frequently sabotaged by our thoughts and, mainly, by our ability to achieve great feats. But remember that even in aviation this is seen as suicidal behavior.
Many airlines decide to conduct frequent tests with their pilots and dismiss them from the company if these patterns persist to avoid accidents.
If they are so strict about the professionalism and preparation of their pilots, why would we act differently?
How seriously have you been doing this?
Whether in the forex market, binary options, or any other market, the psychological factor will make a big difference and prevent accidents or gross errors.
Studies also inform that after a person gains overconfidence, their chances of being right in decision-making fall below 50%.
This means that even if you get it right a few times, as attempts go on, you will be intoxicated with the created personality and will commit a suicidal act at any moment. It will be your operational end because you completely destroyed your resources with bad choices, guided by feelings and thoughts that you were sure were right, but that were actually sabotaging you all the time.
The chemistry created in your body, along with your thoughts, led you to a brief sensation of pleasure that later needs to rest to recover energy. This led you to make wrong decisions so that you could feel stress and later calm after feeling like a loser.
The final conclusion shows that, yes, the psychological factor directly interferes with your decision-making and that any professional exposed to a moment of stress can act in a suicidal manner.
Want to be among the best?
Telegram: @hftinjector
But to what extent is this real? Can we really be influenced by our thoughts? Could this be what is behind our gross mistakes and lack of control over our finances?
Yes and no.
When analyzing the performance of professional traders, we find that they make mistakes just as much as any amateur, differing only in the type of market they operate in.
Traders who made history in the financial market trade or traded mainly in the derivatives market, where risk can be perfectly calculated, also leading to limited returns.
Those who really made history in this market had amounts of money far superior to mere speculators or the so-called “sardines,” so they did not need to earn income every day to ensure the payment of their bills
.
This gives a margin for greater possibilities of errors, as you can make mistakes in almost all orders as long as you get a single good order that pays for all the mistakes made previously, and you will still be growing your resources.
The difference is that for this type of modality, you will need superior skills and knowledge in many subjects, which is not the reality for the vast majority of market speculators who need immediate money daily.
Now let’s talk a little about those who take great risks, the day traders: This “breed,” which more closely resembles aliens, I say this because it cannot be extremely normal to take so many risks, puts us in a privileged position compared to traders, not because they make more money, but because they lose a lot of money. The true “blood in the eyes” or those who constantly need to prove to themselves that they are the best at what they do, because if they are not, they will gain nothing.
Their earnings depend solely and exclusively on themselves, and there is nothing more you can do to change that. It doesn’t matter if you studied at Harvard, if you are a doctor or an engineer or a super mathematician: In the financial market, you will be fighting for a place in the sun with people who have great professional qualifications in various areas and also with people without any kind of education, and often the simplest and least knowledgeable people will occupy a prominent place, and you will just be lamenting the losses you have suffered.
But why does this happen? This is what we seek to understand and comprehend through analysis and studies to know how much the psychological factor influences our decision-making.
In addition to obtaining all possible knowledge and expertise and developing new operational techniques, what is unanimously said is that more than 80% of the success one can have in a day of victories is entirely linked to the type of psychological preparation we have. So we ask: If 80% of our success is guaranteed by our psychological preparation, why do the other 20% often drain all our money?
And this is where things get interesting:
I found a detailed article about airplane accidents that evaluates the reaction and action of pilots in moments of crisis and how this influences decision-making and whether their actions will result in a serious incident that, in the vast majority of cases, results in the death of all occupants, or if it will result in the pilot being hailed as a hero for avoiding a great tragedy:
Studies show that overconfidence, mainly because in other occasions an action taken ended up resulting in success, the pilot tends to act the same way again and stop following the protocol or guidelines about the aircraft.
This clearly demonstrates that in a profession where it is necessary to take such high risks, the majority of professionals tend to act according to the confidence they possess.
But remember what was said earlier: It doesn’t matter your education, your age, or how good you are at something you do, in the financial market your qualities should be considered nonexistent if you want to succeed.
Every day we have to understand that we know nothing and, in a matter of minutes, understand what is happening and, if this is indeed clear, follow our protocol or appropriate strategy to do our job.
Notice that it becomes clear that, in moments of risk, we are extremely and frequently sabotaged by our thoughts and, mainly, by our ability to achieve great feats. But remember that even in aviation this is seen as suicidal behavior.
Many airlines decide to conduct frequent tests with their pilots and dismiss them from the company if these patterns persist to avoid accidents.
If they are so strict about the professionalism and preparation of their pilots, why would we act differently?
How seriously have you been doing this?
Whether in the forex market, binary options, or any other market, the psychological factor will make a big difference and prevent accidents or gross errors.
Studies also inform that after a person gains overconfidence, their chances of being right in decision-making fall below 50%.
This means that even if you get it right a few times, as attempts go on, you will be intoxicated with the created personality and will commit a suicidal act at any moment. It will be your operational end because you completely destroyed your resources with bad choices, guided by feelings and thoughts that you were sure were right, but that were actually sabotaging you all the time.
The chemistry created in your body, along with your thoughts, led you to a brief sensation of pleasure that later needs to rest to recover energy. This led you to make wrong decisions so that you could feel stress and later calm after feeling like a loser.
The final conclusion shows that, yes, the psychological factor directly interferes with your decision-making and that any professional exposed to a moment of stress can act in a suicidal manner.
Want to be among the best?
Telegram: @hftinjector
