Binary options – Psychology
When trading of securities and thus even when trading binary options, psychological factors play a very large role. Here, two trends can be distinguished: The psyche of the overall market and of each individual, acting person.
Three powerful driving forces affect both the individual traders as wel as the totality of all market participants.
The lemming phenomenon:
Greed and fear felt by the traders on themselves but are also phenomena of the overall market -. A mass of investors can buy greedily ever ( “panic buying”) and just panicked sell what triggers a crash. The lemmings effect is more a phenomenon of the total market, which a single trader should not follow: All market participants behave uniformly wrong until they rush like lemmings off the cliff.
Trading on the financial markets
How rational are the feelings when trading on the financial markets?
fragezeichen certain feelings are expressly not wrong. Experienced traders develop an instinct that way more often motivated to passivity than to type. This distinguishes quite essential beginners to professionals: beginner like chasing after a trend. The course is sprung up, it could be, no, it just has to go further up but quickly purchased. The trader wants to miss the beautiful, emerging trend at any price.
Exactly after its purchase increased the price and falls back, loses the trader. Experienced traders therefore buy not just for a break-out. Sometimes it really develops a trend nicely. That they do not care. To anticipate and act to break-out if he or better just before it happened. This example demonstrates that feelings while doing explicitly are not wrong, it just must be the right feelings. Rule out they are not already. We undertake than healthy people not without feelings. But if we allow ourselves to be ruled by counterproductive emotions of fear and greed, we will suffer significant losses. The following are the three main emotions while trading should (there are more) are examined.
The limbic system in the amygdala
Exclamation fear protects living things, the feeling is many millions of years old and technically brain so ingrained that it is not slowing down. It goes with the primal fears after all why to escape death threats. Anxiety reactions take place on the limbic system in the amygdala, which is responsible for simple reflexes, such as the rapid and automatic closing of the eyes by motion in front of his face. Even aggressive action from where it gets its control, it leads to attack or escape. In traffic, motorists soft so reflexively from a collision. On the financial market, the trader closes fearing its positions (“in binary options with the tool “Early Closure”) and thus missed profits because something unexpected has happened. Had he previously factored the unexpected in its risk management, he would be better off. He could do with fear twenty pushups, walk around the block or his wife can wheedle hysterical. However, he would leave the position.
Also greed is a relatively old feeling, it really springs from the precautionary behavior. This is sometimes strong and sometimes weak in humans, in animals, however it works relatively well. The squirrel puts in a knothole of a winter supply of nuts and acorns, of which many a person with dissolute Finance can learn a lot. For trading, this means in detail: It is not wrong if traders want to earn more. Only she seduces the greed to irrational behavior. There are two triggers, namely.