The Effect Of Psychology On Swing Trading

Probably one of the hardest things about swing trading is the psychology of it

. Many people begin their trading career completely unaware of what they are about to face. Trading is a very emotional experience and for many people these emotions are just too strong and this ultimately leads to them failing at being a successful trader. It makes sense then that anyone who wants to improve their trading odds simply needs to gain a better understanding of the market and their emotions. If it was only this easy. Unfortunately, the area of psychology is something often overlooked as many traders are unaware of just how important it is and it is the last thing they ever think about when placing trades. It could be said that the true key to being successful at swing trading lies in understanding the psychology of it.

Psychology here is all about how you manage yourself when trading. Trading usually brings out the best and worst in people, more so when a trade they have just placed begins to make a large profit or loss. It is these emotions that lead to some people making hasty decisions as they are listening to their emotions and not making proper decisions. Just how big of an impact emotions can have on a trader can be seen in the difference between demo and live trading. Some traders are very successful at demo or paper trading. In a short period of time they are able to constantly open and place winning trades without ever suffering a significant loss. However, as soon as they make the switch to trading a live account, they quickly begin to suffer a string of losses and usually end up blowing up their trading account. Why the sudden change in their trading performance? The simple answer is the effect that emotions play in trading, especially between demo and live trading.

If psychology is so important then why would so many people ignore it? If one could learn more about themselves and the market it would potentially offer them a true trading edge over the market and save them considerable amounts of money thanks to avoiding blowing up several trading accounts in the long term. However, many people are simply scared to learn more about psychology because they are worried that what they uncover about themselves will cause them more pain than good. This is the same kind of fear that ruins a good trade. Generally we don't like to find out about ourselves because we are worried that we might not like what we discover or learn. This is the core reason behind why some traders never properly address the issue of psychology and trading.

Whether or not you succeed in the long run in trading depends on you. Are you ready to suffer that loss or enjoy that win? Changing your thinking is crucial to being successful in swing trading and trading in general. Don't be afraid that you won't like what you learn about yourself. Instead, focus more on what and how that information will help you to be a better trader in the long run.

by: Creztor Tessel

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