strong desire

The paralysis of analysis. Indecision.

John all day perfecting their trade rules. He tedious applied indicator for the indicator, despite the fact that many of them showed the same thing. Search continued. John frantically believes that he missed something, but do not know what it is. He is not going to invest until they are absolutely sure that his plan of trade is being protected from errors. He thinks: “I must know every possible factor that could prevent the transaction, otherwise I’ll lose money, but it would be a fatal blow.” John hit the paralysis of analysis. He can not decide, and varies in fear and uncertainty. People differ in the degree to which their striking paralysis of analysis. Some of it is relatively mild and may even work as an adaptive approach to decision making, but for othersanalysis paralysisis a long-standing psychological problem.

“Price of flooding” in trading

You invest 25% of its share capital to which your analysis of predicted growth. Your expectations, however, were not justified. Price confidence falls. You think: “I did such a thorough and detailed analysis. I spent a lot of time to study the fundamental factors of this company. I can not believe that it is falling. “At this point, you hope that the position will develop, and refuse to close it down. Easiest to keep an open mind, than to admit a wrong decision and take the loss. This is called the cost of flooding: a man increases the debt to a losing position only because it has spent much time, effort and / or money.

How to control the situation on the market?

The need to control – an important psychological aspect of profitable trading. Traders are trying to control the market, but in the end, realize that they must accept their fate and do not establish control over the market, but over the emotions. When your money is at stake, it is difficult to remain calm, rational, and fully control myself. You want to win, so you have a strong desire that the price was in line with your projections, but in the end of the deal almost never be sure. Human nature to desire to fully control their own destiny, but it is impossible. Instead, the trader must accept the fact that the market will go wherever he goes, and try to control their impulses and emotions, instead of playing against the impulse market with feelings of anger and frustration.

Scroll to Top