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Trading and Its Remarkable Impact

Introduction

Trading can be understood as the exchange of values in a system to ensure fairness and transparency in the broad framework of multiple options. In current context the trading is know both for reasons behind individual’s both gains and losses anywhere from insignificantly small to large scale earning .

Though exchange of value being the sole theme of the entire trading framework, throughout the time many changes and structural shifts have been made and now there’s more options than ever for us to explore and deal with. Even thought the massive structural changes have been made and now the market has now more options than ever before, the fundamentals still remain the same. The essence it held since the beginning is still present and it continues to be the exchange of values till this very moment.


Market and Trades

The market offers the opportunity to both buyers and suppliers to connect for fair exchange. In the mean time both can subsequently switch their positions from buyer to seller to be able to survive and in most cases reap profits from the changes taking place according to market shift and it’s ongoing trend. While market’s movement is based on it’s overall participant’s decision to buy or sell on the market and this fundamental aspect is what moves all the market.

 It’s just amazing how different factors too can drive the decision of the participants like news and comment regarding that particular market by some authoritative figure based on their knowledge and influence most of the time. Peoples knowing that these kind of situation can impact the market drastically so traders involved in the marked react according to the news  to avoid the loss or to be able to take advantage of the change and profit from it. Therefore at the age where news and access to the information is at individual’s reach more faster and easier than ever people don’t have to wait for the daily newspaper anymore. These changes have significantly impacted the market and it’s functionality and now with traders having access to the market and information at it’s fingertips it’s volatility have increased significantly. With increase in market movement the chances of both earning and loosing money have increased significantly than before.


Strategies and Psychological Aspects of Trading

There are many approaches to trading and are of multiple types and some of the most well known trading strategies are as follows

– Trend Following Strategy

– Momentum trading

– Mean Reversion Strategy

– Breakout Trading

 
Each individual strategy represents the different approaches peoples take while trading according to the ones which suits them the best. It’s a best practice to study and test all other strategies before one decides to settle for the one through all the analysis and back testing. While most success rates in trading comes from  focusing and practicing one strategy and continuously improving in it alone. Most success rates in trading have been reported among the individuals who have focused on one market and one strategy before moving to others. The more understanding a trader has on the movement of the market and price action the better the chances of the success.

Aside from that an individual’s psychological approach to trading also impacts the performance by the huge scale and it’s impact has earned this phenomenon a name which s “ Trading Psychology “ which is based of off observations on the psychological impact and influence of our own mind while on trading. This trains traders in advanced to be aware of mental urge arising from fear, greed and other unguarded thought  and emotions which could lead to make a bad trade out of impulse and it does plays significant role in our decisions while trading.

In order to avoid this from happening sticking to a clear proven strategy is important. Many have traders including some of the well known best traders we have now too come from the same mistakes eventually from which they learned from and became who we know them now. In trader’s community this is one of the most discussed qualities and still till this date many fail to comprehend how important it is. Avoiding this one factor can be the difference between a person making a successful journey in trading or one with a failure and it’s impact is as equivalent as your mind either working for your or working against you because there’s high chances that an untrained mind in situation can make irrational decision leading to one’s loss.
 

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