Is Trading 100% Psychology?
People get exactly what they want out of the markets. Most people are afraid of success or failure. As a result, they tend to resist change and continue to follow their natural biases and lose in the markets. When you get rid of the fear, you tend to get rid of the biases.—Van K. Tharp, Ph.D.
Van Tharp’s supposition is that trading is 100% psychology. Do you agree?
Trading is all about the beliefs you have and the choices you make around those beliefs, i.e. your psychology.
Let’s take a look:
- Why you trade – Based on a belief about what you are going to get from trading
- What you trade – Based on your beliefs about the market
- How you trade – Based on your beliefs about what works and what does not
- When you trade – Based on your beliefs about
- Your trading system – Constructed out of your beliefs
- Your trading mistakes – Are mental errors
What do you think? Is trading 100% psychology? Or are there other factors at play?
Sam Eder is a currency trader and author of the Definitive Guide to Developing a Winning Forex Trading System and the Advanced Forex Course for Smart Traders. He is a key team member at premium FX services provider www.fxww.com and part owner of Forex Signal Provider www.fxrenew.com (You can get a free trial). If you like Sam’s writing you can subscribe to his newsletter for free.