On this page we’re going to check out the concept of negative and positive trades.
We will note that good deals are a result of making ‘good trading decisions’ but alas may still have ‘bad outcomes’.
On the other hand, bad trades are a result of making ‘bad decisions’ and on occasion might actually cause ‘good outcomes’. buy iota coin
The trader’s best tool in breaking the mold of most novices who lose wads of money in the market is to focus only on making good trades, and worrying less about good or bad outcomes.
In our Workshops we make an effort to deliver students strategies which help identify the best trades to suit particular and personal trading specifications. We certainly have a quantity of trading strategies that can be used to reap rewards from the stock market, with each strategy by using a particular structure or ‘setup’ to formulate a smart trade. Most traders however don’t have such a structure, and as a result, too often give in to the dreaded ‘impulse trade’.
This is a generally overlooked concept in committing literature and refers to an unstructured, non-method, or non-setup trade.
Succumbing to Spontaneity
We’ve all recently been there!
You look at a chart, suddenly start to see the price move in one direction or the other, or the charts might form a short-term style, and we jump in before considering risk/return, other open positions, or a number of the other key factors we need to think about before entering a trade.
Different times, it can feel like we place the trade on computerized preliminary. You may even find yourself staring at a recently opened position thinking “Did I just place that? ”
All of these conditions can be summed up in one form – the impulse investment.
Impulse trades are bad because they are carried out without right analysis or method. Successful investors have a particular trading method or style which serves them well, and the instinct trade is one which is done outside of this usual method. This is a bad trading decision which causes a poor trade.
But why would a trader suddenly and spontaneously break their valid trading formula with an impulse trade? Surely this doesn’t happen too often? Well, however this occurs constantly – even though these transactions fly in the face of reason and learned trading behaviors.
Even the most experienced traders have was a victim of the behavioral instinct trade, so if you have done it yourself avoid feel too bad!
Just how it Happens
If it makes no sense, why do traders succumb to the impulse trade? Because is usual with most bad investing decisions, will be certainly quite somewhat of structure psychology behind it.
In a nutshell, traders often succumb to the ritual trade when they’ve recently been keeping bad trades for a long time, hoping against all reason that things will ‘come good’. The situation is exacerbated when a trader knowingly – indeed, willingly – places an impulse trade, and then has to deal with additional baggage when it incurs a loss.
One particular of the first internal factors at play in the impulse trade is, unsurprisingly, risk.
Contrary to popular belief, risk is not really a bad thing. Risk is just an bound to happen part of playing the markets: there is always risk involved in investments – however, best organised transactions. Nevertheless , in smart trading, a structure is in place in front side of you transaction to accommodate risk. That is certainly, associated risk is factored into the setup so the risk of loss is accepted as a portion of expected outcomes. Each time a reduction occurs in these situations, it is not because of a bad/impulse control, nor a trading mindset problem – but this is the result of adverse market conditions for the trading system.