Page 7 - Module 2_The_Human_Element

Module 2 -Lesson 1 – the human element

Limiting profits:
Feeling that you don’t deserve to be successful, to have money, or to make profits. Usually,
psychological issues such as poor self-esteem;

Not following your proven trading system:
You don’t really believe it works. You did not test it well. It doesn’t match your personality. You want
more excitement in trading. You don’t trust your ability to choose a successful system;

Not trading the correct position size:
Dreaming that the trade will only be profitable. Not fully recognizing the risk and not understanding
the importance of money management. Refusing to take responsibility for managing your risk;

Trading in excess:
Need to conquer the market. Greed. Trying to get even with the market for a previous loss. The
excitement of trading (like compulsive trading);

Being afraid to trade:
No trading system in place. Not comfortable with risk and the unknown. Fear of total loss. Fear of
ridicule. Need for control;

When trading with money you can’t afford to lose:
Last hope for success. Trying to be successful at something. Fear of losing your chance for the
opportunity. No discipline. Greed. Desperation.

4. reverse psychology

By developing discipline and keeping emotions out of the picture, day traders can use trading
psychology to their advantage, not just to make profits but also to minimize risk as well, especially
when things go bad.

While a bit of market knowledge is also essential, in most cases, it is the emotions that often lead to
such immature decisions by traders that turns out to be costly experiences in most cases. Fear is
part of human nature and everybody experiences it, so embrace fear and focus on dealing with it.

Learn to identify the good kind of fear from irrational fear so you can focus on acting on it. Once you
pinpoint the source of your fear, make the necessary changes in your trades. This way you have
turned your fear into an area of growth and improvement.

5. accepting loss
The first reason why traders lose may seem obvious, but, it stems from long-term social conditioning:
the inability to accept loss. Loss generates powerful emotions such as fear, uncertainty,
apprehension, and self-doubt, especially with men.

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