The Psychology Behind Technical Analysis

The psychology behind trading stocks is the force that moves the stock market. A stock chart is nothing more than a picture of human emotions. Painted on the canvas are the emotions of greed, fear, hope, and euphoria. As a disciplined trader, you capitalize on the psychological demons that plague other traders.

• Should I buy?
• Should I sell?
• Should I take profits?
• Should I take a loss?

These are some of the questions that destroy trading accounts because the novice traders asking these questions do not have a plan. If you asked a professional trader one of these questions he or she would say, "I don't know. What does your plan tell you to do."

So what ends up happening? They get excited and buy at the worst possible time. Then the stock reverses. Fear creeps in and then the stock goes lower... and lower... and lower. Finally the pain becomes too much to bear so they sell taking a huge loss.

Finally, your confidence level will go down,  your Dress code will change,  always you keep your mind and body into stress and finally you are making noise in the family system...Think...why ?

All of this mental anguish can be eliminated by having a decent trading strategy and the mental discipline to stick with it.      Write down a plan for the trade before you trade the stock. Then trade it according to the plan that YOU have written.     Remember that you have devised a plan before you got into the trade when your emotions were stable.     Now you can trade your plan with confidence.

For most novice traders, it is not their strategy that is causing them to lose money. It is themselves that is their biggest enemy.

Learning to trade stocks and applying technical analysis to charts is mostly about human psychology - not chart patterns and candlestick patterns themselves

All we really have to know is the psychology behind the moves in the stock market. We have to learn how to control our own emotions first and then we have to learn how to profit off of those that have not learned how to control them.

Be positive, Learn and  Earn.

Cheers..