I’m admittedly a rookie at trading and TA but thanks to Philakone’s youtube tutorials I’m getting more into it. I think there’s a major component of trading that people overlook which is the psychological factors. I’m going to outline three major ones but I’m sure there’s more so please add in the comments.
1-FOMO- Fear Of Missing Out. How many people bought ripple at around 3 only to have it tank on them? Those people saw huge gains and couldn’t bare the thought of missing out on more.
I believe there are two parts to this. The first is the fear of making the mistake of not having bought in to catch the gains. The second is getting caught up in the dream of making tons of money, similar to the lottery ticket fever that happens when the payout gets crazy high.
2-Inability to take a loss- How many of us have made a bad trade and kept holding hoping to recover the loss? People have a hard time losing and will do ridiculous things to avoid doing so.
3-Confirmation Bias- Seeing what we want. We all want that super profitable trade right? So we’re looking for signals of a Breakout. This causes us to see signals where there are none or to see only one side of mixed signals because
what we’re looking for.
These are the three most common ones I noticed but I’m sure there are more. As they say in AA the first step is to admit you have a problem so be aware they exist and take note of the times you fell into these traps and hopefully you’ll start to catch yourself in the future. Be sure to upvote if you found this helpful and good luck!!!