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Are there any typical investors psychological behaviour? The behaviour of investors is, among others, a subject of analysis of a discipline called behavioural finance. Typical patterns that can be distinguished in this respect include: herd behaviour, overconfidence effect, or the regret theory. More information can be found in our market psychology section.
I usually trade by just following my intuition. How can I improve my trading results? Intuition may sometimes play a significant role in the investment process, but typically it should not be the only tool that the trader uses. First there should be an assets analysis (see what is available for trading and how they move), then it is extremely important to make a plan and stick to it. This is probably the most often disregarded step in the investment process. When you have a plan on how much to profit and how much you can risk on a trade and in the whole investment process, stick to it. The basics concerning risk management are covered in the risk management section of our website. One should not be too greedy – typically prices will not rise or fall indefinitely, and one should not wait until the market recovers to cover losses. Finally it is also advisable to consider the use of all available tools that support the trading decisions, to help make trading decisions, such as the technical analysis tools available on our MetaTrader 4 platform.
I want to learn more about trading on financial markets. How should I start? Getting to know the financial markets is more efficient when combining a theory with practice. In order to get the practical, hands-on experience, we recommend you to use our demo account. This will help you to familiarise yourself with the different markets and assets. Theory can be studied on our website, there are also many books and other on-line resources that can be beneficial. The most important topics to be covered include fundamental analysis, technical analysis, risk management and psychological aspects.
Is it possible to become a professional trader?
Being a professional trader is a “dream-job” for many beginners in the investment world. It is true that there are investors, especially at an institutional level, such as hedge funds, that treat operating on financial markets as their main source of income. However, achieving such proficiency for many potential investors may be really difficult, as it requires lot of hard work spent on perfecting the quality of trading techniques, risk management techniques and one’s own psychological attitude. Professionalism in this sense requires more or less a stable (and positive) rate of return on investment, that may be hard to achieve, given the financial risk that has to undertaken in the search for profits.
Is there such a thing as market psychology?
Yes, definitely. Some people say that a good trader should have a poker player attitude. That is, one should put aside their emotions and focus only on the information related to their portfolio investment. This is very difficult to perform without some time spent on the self-study and constant improvement of one’s own psychological attitude toward trading. Knowing some basic psychological patterns that traders follow may also help, some of such negative behaviour are presented in our market psychology section.
What makes markets move?
There are many different factors that have an impact on the dynamics of the financial markets. For a broader picture it may be beneficial to think about the market as a place of interaction between supply and demand, analysing the reasons that make traders buy or sell given assets. The traders acting on the demand side may be influenced not only by the economical foundations of an asset, but also other subjective things like fear, confidence, behaviour of other market participants, etc. Additionally on the supply side, factors may come into play such as the random, force major events, natural resources, weather and others, all of which are explained in our fundamental analysis section.