Gold Psychology: How to Improve Tips

Never pick bottoms & tops

Some traders are always trying to pick top or bottoms.

These people want to sell at the top & buy at the bottom even before the market has reversed. Those who try & pick these turning points are never accurate, their positions usually moves against them only for them to get stopped out before the market turns. It is always better to wait & open a position after the market has turned than try and predict before the market has turned.

Although there is always a turning point for a trend, no one can predict the exact high and low of a trend. The high & low is formed by the market forces.

Never Average down

Some traders keep buying when the price falls lower so that to neutralize the loss once the trend starts moving in their trade direction. This never works because generally, when the price starts to move in a certain direction it usually continues in that particular direction for a while.

The idea of buying against your first trade position to offset its loss gets more complex once the market starts to move against your second trade position.

When you need to open various positions just to erase the first mistake, you're entering new positions not because of your analysis, but to save your losses that can be easily avoided in the first place using stop loss order.

Know when to trade and when not to

A good trader understands that there are times when it is better to be in an all cash position and watching the market from the sidelines. Knowing when not to trade is just as important as knowing when to.

You can trade one day in a week & make profit or 5 days a week & make a loss. It's all about following your trading system. If there is no signal to trade then don't open any order that day, it might mean the difference between keeping your trading account balance the same or making a loss that day.

Don't fall in love with your trades

The market does not care which gold instrument you buy or sell, and the market is always right. Don't marry your orders, the reason why trading with a trading plan is recommended is because most of the objective analysis is done before a trade position is executed. Once a trader is in a trade they tend to analyze the price movement differently in the hopes that the prices will move in a favorable direction instead of looking objectively at the factors that may have turned against your original analysis. Those with a losing position tend to marry their position, which causes them to disregard the fact that all signs point towards continued losses.

Never over trade

Over trading is a common mistake. They open high trading leveraged trades - by opening large gold positions than what their account balance can allow.

Leveraging your account too high by transacting far larger positions than before puts you in a very vulnerable position leading to bad decisions. Always limit your trading leverage to less than 10%.

Remain emotionally detached from the market and the excitement that its movement creates.

Do-not let your emotions rule. Always be objective with your decisions.

Do not constantly check prices all day long unless you're scalping. If you get caught up in tick watching then you are going to make wrong decisions based upon greed or panic.

The truth is that many traders know it, but in the actual trading, they actually repeat the same mistake, they keep opening new positions that are against the trend in order to lower the average price. The result is that the first open position is already a couple of hundred or even thousand pips away from the current price.

Gold trading can be unpredictable. Sometimes even experienced traders fail in Gold. It does not happen due to lack of knowledge & experience. Gold traders who spent several years do have knowledge and experience. Sometimes they fail because of greed & disrespect to Gold psychology.

This science of Gold psychology is very important both for beginners & seasoned traders. Psychology teaches you to master emotions. When you're angry you forget about everything. You do not mind economic indicators. You forget about market forces. All you remember is that you need to earn money. But you totally forget about analysis. When you're too excited you cannot make reasonable decisions. Thus, you open trade positions not because your trading strategy suggests so but because you as a trader want to become a Gold millionaire. Some traders picture in their minds cars & houses they'll buy after large wins that usually never happen.

The Psychology of trading is a subject not often discussed and dealt with. Gold traders usually keep themselves busy in finding a trade system or strategy that works for them. Finding the right system is indeed crucial, however, understanding the psychological aspects & barriers of trading should not be neglected.

Stick to a trading strategy to block out noise caused by short term factors that can affect longterm profitability. Look at what the charts are telling you, the market is always right, never ignore what the charts are telling you. Finally back test & refine your analysis of charts to improve your strategy.

The Psychology of Gold is very helpful in controlling emotions. Emotions are very powerful forces in any investment market. This is why traders should have a good trade strategy.

A good strategy will consistently produce profits over the long-term if properly followed, so be sure to control your emotions, do your homework, & stick with your plan and the pieces will fall in place.

How to Improve Gold Psychology with These Methods and Tips

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