Gold Psychology: How to Improve Tips

Never pick bottoms & tops

Some traders are always trying to pick tops or bottoms.

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

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

Never Average down

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

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

When you need to open various trade transactions just to erase your first initial mistake, you're entering new positions not due to 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 Trade

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

You can trade fewer times in a week & make profits or many times in a week & make losses. It is more about following your trading system, than just opening trades - for the sake of trading (some maybe just open trades for the thrill, so as not to get bored). If there is no signal to trade from your trading system/strategy then don't open any trade that day (if you are going to get bored, get bored), it might mean the difference between keeping your funds in your trading account or making a trading loss on 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. Do not marry your orders, the explanation why trading with a trading plan is recommended is because most of the objective analysis is done before a trade is executed. Once a trader is in a trade they tend to analyze and interpret the price movement differently in the hopes the prices will move in a favorable direction instead of looking objectively at the factors that may have turned against your initial analysis. Those with a losing trade position tend to marry their trade 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 leveraged trade positions - 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 market decisions.

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

Truth is that many of the Gold traders know it, but in the actual trading, they actually keep repeating the same same error/mistake, they keep opening new positions that are against the trend in order to lower the mean average price. The result is that the first open trade position is already a couple of hundred or even thousands of pips away from the present market price keeps heading against them. This is the reason why traders should not over-trade.

Gold 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 due to greed & disrespect to Gold psychology.

This science of Gold psychology is very important both for beginners & seasoned traders. Psychology trains you to master emotions in trading. When you get angry you forget about everything you learned and trained. You forget about market forces. You do not mind economic indicators. All you remember is that you need to earn money. But you totally forget about analysis. When you're too excited you can't make feasible 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 & dealt with. Gold traders usually keep themselves busy in finding a system or strategy that works for them. Finding the right trading 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 showing you, the market is always right, never ignore what the charts are showing you. Finally back test & refine your analysis of charts to improve your strategy.

The Psychology of Gold is very helpful and useful 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 profit 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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