There are many forms of investing online. While I can give you a
list that is a mile long, these are the most common forms of
successful investments. Some of the following know how to invest
terms are:
1. Option trading
2. Future trading
3. Currency trading
4. Stock trading
5. Future trading
6. Forex trading (or) foreign exchange trading
I want to start this investing online critique out with a
story... On a beautiful late spring afternoon, twenty-five years
ago, two young men graduated from the same college. These men
were very much alike. Both, better than average students, were
personable and filled with ambitious dreams for the future.
For the sake of my example, I will set both college graduates off
online trading using a day trading plat form. Through a gift,
both start with the same online investing investment risk
capital, the same daytrading plat form, and the same trading
system with precise rules for entry and exits.
Shockingly, there is a difference. After one month, one
day-trader went broke / bust, while the other day trader returned
a 20% profit.
Have you ever wondered, as I have, what makes this kind of
difference in people's trading? It is not always a native
intelligence, talent or dedication. It is not that one person
wants success and the other does not.
The difference lies within the psychology of the brain. Your
psychological mind set is likely to play a larger role in your
trading online career than your chosen technique or any other
details associated with your day-to-day practice.
Here are some good examples:
1. One person looks at a glass ½ empty, while the other
personality looks at that same cup as ½ full.
2. Someone may look at problems and call them stress, while
another individual looks at troubles as challenges.
3. Another one may look at a ship in a storm as an adventurous
roller coaster ride, while another human being sees the same
situation as a hurricane that has a death call.
I am not the only one to discover this...
In his book, "Trade Your Way to Financial Freedom", the renowned
American psychologist Dr. Van Tharp discusses the role psychology
plays in trading success. He divides trading into three
Ingredients.
In his pie chart:
System is 10%
Money Management Success is 30%, and
60% pertains to the psychology of thought and emotion.
Tharp discovered that the trader's psychology make up of the mind
has more to do with his success than anything else does.
However, what exactly is the psychology of the mind?
In short, the psychology of the mind refers to your thinking and
emotional actions and responses to any given situation...In
trading, fear, greed, vanity, pride, hope, jealousy, denial - all
these can affect investment decisions. Although, your aim in the
market is to maximize your profit and minimize your risk,
thinking and emotions often make this easier said than done.
FOR EXAMPLE - Traders, who cannot control the psychological
process of thought and emotion, make the wrong decision - such as
the common amateur mistake of holding a losing position in the
belief that someday it will become a winner.
Loss aversion is a classic mistake. By nature, humans value a
loss. Therefore, you suffer almost twice as much pain losing $1
as you would in gaining $1. Loss aversion compels most traders to
hold a losing stock while it plummets downward. This clouded
judgment clearly contradicts the trading adage: cut your losses
and let your profits run.
Emotional investors hold losing positions because they view paper
losses differently from realized losses. An investor also engages
in other forms of irrational behavior.
EXAMPLES are attributing success as natural and losses to bad
luck.
This is just the tip of the iceberg. When talking about the other
devastating effects of trading, if you do not have the psychology
of your thought and emotions in the proper prospective the
consequences can be devastating.
This is what opens up problems for new traders, and then they
lose manage money very quickly in the markets. Most people
completely wiped out their finances within the first year of
trading. So, as you can see, your thinking and emotions play a
big part in determining whether you fail or succeed, but did you
know that thought and emotion make up two different spheres
pertaining to trading success?
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David Jenyns is recognized as the
leading expert when it comes to
designing profitable trading systems.
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About the Author
READ my articles; you'll FIND the best trading plans put together. Searching for these on your own, is a needle in a haystack. I trade everyday & my progressive efforts found the perfect system & plans work. These trading systems are unbelievably powerful, yet simple to use. Until recently, I've kept this formula to myself. NOW, I reveal all. CUSTOM ARTICLES AVAILABLE UPON REQUEST :-)