Things that influence our trading decisions

[gunhell16]

Good day everyone, let's talk about the factors in our Trading decision in terms of psychology. There are many things that affect our decision-making, and that's why sometimes we don't know why we make that decision. Sometimes we are repeating the same mistake over and over. Let's find out the common triggers that happen in our brain that make our judgment poor in trading.

* Emotions in trading

Our emotions are part of our human behavior and it has a profound impact on our trading decisions. In the context of trading, the two primary emotions that affect our decision-making are "FEAR and GREED" Fear is a powerful emotion that will push us to think twice about entering and exiting the trade. Sometimes because of our fear of the trade, we exit immediately even though we know that it is too early to do so. And when fear dominates we become overly cautious, which also causes us to miss the opportunity for profitable trade even though we have seen the high probability set-up we should enter a trade but we don't because of fear.

It's the same when we enter a trade, we immediately exit because our immediate thought is that we might still lose. This is also due to fear, Now if we are Greedy it also has an effect on our decision-making. Because this will push us to take excessive risk because we want a higher return. So, because of greed, we will increase the leverage that the position size is too big, the type that can only gain a lot, we will trade 100% capital in just one trade. It will also cause impulsive action, and we will also be tempted into speculative trades without proper risk management.

* Emotional Intelligence

This is the way for us to recognize the emotional estate, and how it influences our decision-making. Our traders have different techniques to cultivate emotional intelligence and maintain emotional balance during trading. One of these is "Mindfulness meditation" a type of technique that can help people to observe thoughts and emotions without judgment so that rational decision-making can return. And another effective method is "Journaling" Here, traders can track the decisions they made in the past, and they can reflect on their emotions.

This is where they can identify the triggers of why they decided to enter the trade so that the same mistakes will not happen again. Because a trader gains insight into his emotional response and can develop the right strategy to manage them effectively.

* Social Support

This is to manage emotions in trading, we need to have an engagement with the community of traders so we can also ask for guidance and other advice from a mentor who can provide emotional support. Because if we have interaction with like-minded individuals who understand the life aspect of the psychological aspect of trading it will help for valuable insight to manage emotions effectively.

• Cognitive Biases
  
  This is an inherent aspect of human behavior, a systematic pattern that affects our decision-making. This is how our brain processes information, it is not an intentional or deliberate action, and this is the result of our brain simplifying complex information.
  
  Because we are only human, we are prone to these cognitive biases, because our brain naturally searches efficiently for easy or mental shortcuts, and because of that, our decision-making does not become rational when we make mistakes. And one of the good examples here is the
  
  
• Confirmation Bias
  
  this is the time we look for information to confirm our beliefs or opinion. And we ignore the contradicting evidence or in other words we prepare more that will support our belief. And the good sample here is if when a trader is bearish or perma bear his belief in the market will still fall in the price in a certain area.
  
  Let's assume Bitcoin(BTC) will fall to 3k$ or 12k$ so due to confirmation bias he will look for information such as articles, or expert opinions that will strengthen his belief that the value of BTC will fall further. He will ignore the contradicting information he sees. And the only thing he will pay attention to is aligning with his existing belief. So what will happen is that he can miss the alternatives that are view coins or the crucial data that could impact decision-making. And I see many traders like this who do not know that they are victims of their own personal bias or never understand the role of cognitive bias.
  
  
• Loss aversion
  I'll admit I'm guilty here, maybe almost all traders are. This is the time when the impact of negative losses is stronger than the positive impact associated with gains. It means that the pain we feel from losing is more intense than the joy of experiencing profit. So this bias has a negative impact on our decision, when a trader experiences losing trades, the fear and discomfort he will feel will cause him to be reluctant, and exit the trade.
  
  It can also happen that you don't put a stop to loss or are in a position to just let it go and risk something like that even though there is evidence that it will happen. And this loss aversion behavior that avoids losing leads to worse losses in the end. Because if you don't cut your losses, you'll just miss out on other opportunities.
  
  
• Overconfidence Bias
  
  This means that if a trader experiences consecutive wins, they become like this. Because of this opportunity, we can increase our confidence that we are doing the right thing. But this is also the time when we take excessive risks because we believe too much in ourselves that we already know a lot. And we think that we have special skills in trading, and the result of this is that our position side is too high that every trade we will get a profit that can lead to excess and come over-trading. But the truth is that this bias is dangerous because we will neglect risk management. Because it will blind us to the real market reality. And potential warning signs can't be seen first to adjust if necessary.
  
  And in order for us to manage these biases, we need to prioritize self-awareness, and consciously challenge biases. Because if we know these biases we can make a method and rational in our decision making.
  Reference: https://capital.com/emotions-in-trading
                 https://www.verywellmind.com/what-is-emotional-intelligence-2795423
                 https://www.verywellmind.com/cognitive-biases-distort-thinking-2794763

[1714628963]

1714628963

[1714628963]

1714628963

[1714628963]

1714628963

[1714628963]

1714628963

[@sriyan]

There are several factors that can influence trading decisions.

1. Economic indicators

Eg: GDP growth, inflation rates, interest rates

2. News and Events

Eg: Geo political events and regulatory changes

3. Technical Analysis
4. Market Analysis
5. Trading Psychology
6. Risk Management

[mvdheuvel1983]

There are a lot of things that influences our trading decision. Some of the factors which you have mentioned can also positively influence our trading decision. They are not bad in themselves I think it depends on the right timing of their application. This is one of the reasons why every newbie trader must spend some good time in the demo trading environment and also every newbie trader should not be a loner but being part of a community of other traders. By being a part of this community which is the fastest way to learn from the mistakes of others because I believe that other traders would share their good stories and their bad stories and we can learn from it.

[yudi09]

The most basic in trading crypto is knowing about the type of coin to choose in trading.
The coin to be chosen must be known with certainty about its strengths and weaknesses.
After knowledge of the coin to be chosen as an investment asset, sufficient capital also plays a big role in supporting it.

Emotional control or emotional intelligence is what is needed when traders are able to have extensive knowledge about the types of coins because the goal of every trader is to make a profit, not lose or lose money, even though that is part of the risk involved in trading activities.

Every decision is born because someone has knowledge of what will be decided.
Therefore, emotional intelligence in trading is not the first for me even though it is one of the factors in achieving trading success.
For beginners this must be considered.
Maybe for those who are not beginners in the world of trading, besides emotional intelligence, the ability to read market conditions is also very influential in decision making.

[GreatArkansas]

* Emotions in trading

This is very common and I can give my own example and own experience for this:

For example, you entered a trade and before you entered a trade you already have the plan for an entry price, stop loss price, and exit price.
The position is already open and you are already in profit suddenly you saw some news or post on social media which causes a price drop, and then you panic and feel to close your trade immediately even if the stop loss price is not yet met.

See? Your emotion ruined your trade position even you already plan everything before you open a trade.

[ololajulo]

While emotional intelligence is crucial, adopting a comprehensive approach that takes into account all the factors discussed can significantly improve trading outcomes. Traders should strive to develop a holistic understanding of their emotions, cognitive biases, and actively seek support from their trading community. By doing so, they can make well-informed decisions and increase their chances of achieving success in their trading endeavors

[michellee]

* Emotions in trading

This is very common and I can give my own example and own experience for this:

For example, you entered a trade and before you entered a trade you already have the plan for an entry price, stop loss price, and exit price.
The position is already open and you are already in profit suddenly you saw some news or post on social media which causes a price drop, and then you panic and feel to close your trade immediately even if the stop loss price is not yet met.

See? Your emotion ruined your trade position even you already plan everything before you open a trade.

Agree with this as it has happened to me many times

Managing emotions in trading is not easy and requires sufficient experience and practice so that we don't falter when there is negative news so we can continue with our plans. We do not close the trade immediately because we think the price could go up a little more to reach our target. If we do the math, it is clear that we will get several times the profit from the purchase price.

Greed often comes when we have succeeded in seeing the profit coming and delaying closing the trade. We often forget that market conditions can change immediately, especially after reaching their highest price, which makes us postpone it for a while.

And I think the emotional factor that influences us the most in trading is because we want to make a profit, but after being profitable, we even want bigger profits. It is greed and it has become an influence for most traders.

[Nrcewker]

Almost everything influences the trading process. And in fact - to make a decision is not an easy task. So, it is only at first glance that everything is simple, accessible and understandable.

If you become mentally strong, then many of the issues mentioned in the op can easily be solved. You need to be determined completely and should not lose focus from your goal or daily limit. Making a decision was always hard, as several factors affect here. You need to analyse the risk, estimate the outcomes and predict the direction before investing in any coin. If a person excels in everything I mentioned previously then definitely he can reduce the risk and can completely change his profits or basically increases it.

[BD Crypto]

* Emotions in trading

This is very common and I can give my own example and own experience for this:

For example, you entered a trade and before you entered a trade you already have the plan for an entry price, stop loss price, and exit price.
The position is already open and you are already in profit suddenly you saw some news or post on social media which causes a price drop, and then you panic and feel to close your trade immediately even if the stop loss price is not yet met.

See? Your emotion ruined your trade position even you already plan everything before you open a trade.

Thanks for sharing but these aren't all about emotional trading. I have some of my experiences which is very common among the Investor and they are also victim of it.

I was used to buy Bitcoin when it gains velocity to upward but I was in FOMO almost every time. When market pumps suddenly I rushed to make my position. But the perfect time to invest is when the price is at the bottom. I made this faults again and again and lost a big amount from my assets.

When it's about news related price drop, I will say it's a good habit to observe crypto news because we may remember what happened when Luna crashed. Some of us bought after the bad news arrival and they lost entire funds. But most of the time News manipulate prices a little. So we must have trust our trading strategy and should implement properly our decisions to get the best result in trading and not to lose our trades by being confused like a fool.

[SquirrelJulietGarden]

Emotion is a biggest enemy of a trader. If you can not control your emotion, you can not control your decisions and when you lose control, you lose money.

Knowledge can help you to have better belief in what you invest your money in. It is partially helpful for you only and can not help you to control your emotion entirely. Without knowledge, you will be very uncertain with any word you get from media and your emotion will like a roller coaster, up and down with very big margins.

I recommend newbie traders to not trade but if they seriously want to trade, learn to increase their knowledge first. Fundamental knowledge about projects, coins they invest money in and knowledge about trading.

[darewaller]

There are a lot of things that influences our trading decision. Some of the factors which you have mentioned can also positively influence our trading decision. They are not bad in themselves I think it depends on the right timing of their application. This is one of the reasons why every newbie trader must spend some good time in the demo trading environment and also every newbie trader should not be a loner but being part of a community of other traders. By being a part of this community which is the fastest way to learn from the mistakes of others because I believe that other traders would share their good stories and their bad stories and we can learn from it.

If we put them in good use yes. Timing is important in trading because the market is fast-moving. I heard lots of negative feedbacks about demo trading so I think it's better to practice in real-time but we can still be able to use smaller amounts.

It's not wrong to be a loner. It's a common personality of some people but if you think you are experiencing some problems then it's better to have someone to talk to so that they can give you advices and encouragement. Bitcointalk is a great community but it's still up to the person's ability to adapt and improve. Sometimes we can only change if we commit the mistake and not by learning it from others.

[blockman]

This a good list, but the most usual reason that influences someone's trading decision is about being emotional. I do know that many pro traders won't be affected by that but the majority is being affected by their emotions. When you're too greedy and you're not satisfied with the profit that you should take, the emotion ticks in and likely won't give that satisfaction that you should have and even if you have to take profits, your emotion will stop you from doing so.

[Distinctin]

* Emotions in trading

This is very common and I can give my own example and own experience for this:

For example, you entered a trade and before you entered a trade you already have the plan for an entry price, stop loss price, and exit price.
The position is already open and you are already in profit suddenly you saw some news or post on social media which causes a price drop, and then you panic and feel to close your trade immediately even if the stop loss price is not yet met.

See? Your emotion ruined your trade position even you already plan everything before you open a trade.

This is an actual scenario when trading. What you plan may sometimes be forgotten and create a new plan that is not yet sure if it will work or not. That’s why traders are discouraged from being carried away by their emotions because trading itself is a battle of emotions. In the end, you’ll only compromise your trades over your emotions and end up in losing position. However, I believe this advice may be easy to say but definitely hard to follow when you are actually in a trading scenario.

[Mahanton]

* Emotions in trading

Most of the time, this is the main thing that do really influence out my trading decisions or plans because if we do speak about other aspects then i dont really have that kind of behavior
on changing on what i have been able to list up on which i do follow on whats written or been plotted or drawn when it comes to charting and other aspect. What do really affects me
most on which it do really end up for me to alter out my decision? Its my EMOTIONS, specially on the time that the market would really be having that sudden news on which
it would really be triggering out that kind of impulsive approach within inside.

Overtime, i was able to control out this kind of problem on which it did make some time and lots of experience but once you do reach out this state then you would really be
finding yourself that dumb and would be sticking into your plans no matter what.

[ScamViruS]

Almost everything influences the trading process. And in fact - to make a decision is not an easy task. So, it is only at first glance that everything is simple, accessible and understandable.

Sometimes doing nothing is a profitable decision for the trader. Trading is a game of emotions, the trader who can control his emotions will win. The most important thing in trading is to see what coins you like to buy, and what is the recent development of those coins. If a trader trades against the market trend and buys shitcoin emotionally, he will end up with huge losses. So there are many things to keep in mind while trading so that you don't regret later.

I have personally experienced many expected trades ended unexpectedly and I just sat and watched and had nothing to do. Therefore, decisions should be made with patience in all aspects of trading, so that dangerous decisions like emotional decisions do not come to mind.

[Viscore]

* Emotions in trading

This is very common and I can give my own example and own experience for this:

For example, you entered a trade and before you entered a trade you already have the plan for an entry price, stop loss price, and exit price.
The position is already open and you are already in profit suddenly you saw some news or post on social media which causes a price drop, and then you panic and feel to close your trade immediately even if the stop loss price is not yet met.

See? Your emotion ruined your trade position even you already plan everything before you open a trade.

Probably emotions are mostly the reason why we often get destructed when trading. That is because we tend to forget that emotions are not good in trading. And while most traders cannot control their emotions when trading, especially when greed is high, that’s the reason why their trades end up unsuccessful not because they don’t have the skills to trade, but because they’re driven with too much emotions that will ruin their focus in trading.

[adaseb]

The biggest issues and why most traders never make it in this business is basically greed and fear.

You enter a good trade, you are in profit but you don’t get out due to greed. Then the trade goes against you and as soon as you are break even you close it and it eventually starts to go your way. But you already closed the trade due to fear.

This is why many blow up their accounts everyday. If it wasn’t for this emotion of extreme greed and fear then trading would be as difficult as it is.

[edmundduke]

Trading has always been a PvP game with a limited supply. This means everything that affects us as humans also influences us as traders.
It has been steadily changing however with AI and bot trading. Those systems have no emotions (tho they are still coded based on human emotions). They have their own weaknesses but the effect they have had on the market is obvious.

[xSkylarx]

• Loss aversion
  I'll admit I'm guilty here, maybe almost all traders are. This is the time when the impact of negative losses is stronger than the positive impact associated with gains. It means that the pain we feel from losing is more intense than the joy of experiencing profit. So this bias has a negative impact on our decision, when a trader experiences losing trades, the fear and discomfort he will feel will cause him to be reluctant, and exit the trade.
  
  It can also happen that you don't put a stop to loss or are in a position to just let it go and risk something like that even though there is evidence that it will happen. And this loss aversion behavior that avoids losing leads to worse losses in the end. Because if you don't cut your losses, you'll just miss out on other opportunities.
  
  

This is mostly my problem right now. I dont really put stop losses when I am on the verge of losing streaks because what I think is that it is like a magnet from the price to go there and hit it, which makes me lose more. It is still my fault as I only put stop losses that are really close on my entries and also because they are not that calculated. But again, we are humans, and we can experience those things, and I really do hope that they won't affect us the next time we experience them, as we can learn a valuable lesson from them.

[death69]

In trading psychology, humans are cognitive misers. Heuristics save mental energy when making decisions. Certainly, fear and greed motivate. They're not the only emotional variables in trading decisions. Regret and envy also matter. Your emotional intelligence explanation is interesting, however it tends to emphasize emotion control more than emotion recognition and understanding. Mindfulness and writing may be overly hopeful for emotional management. Cognitive restructuring or social sharing may help traders. Trading psychology should investigate social support and cognitive biases. Anchoring bias and hindsight bias may also affect trading decisions