Key TAKEAWAYS
Key TAKEAWAYS
Trading psychology remains a keen area of research among psychologists and a well-known psychologist in this area is Norman Welz. With his recent book ‘Trading Psychologie’, he has gained the appreciation of many as the theory and application seems inclined with the practical working of the traders. The insights and experiences of Welz in the financial market make it a unique source to read on trading psychology.
There is a lot to learn from this book and learning how to develop a trading brain remains the best part to grasp.
Is neglecting trading psychology okay?
Neglecting trading psychology when it is one of the driving forces of financial market seems absurd but some of the traders still do it. According to the approach of some traders, psychology is nothing in trading but the only things that matter are being well-informed, experience, and exercising rationality. However, Welz argues that these things can’t bring much help if a human brain is not psychologically well-inclined and fine-tuned to the right programs.
Trading is 100% psychology, says Welz and mental strength is a fundamental aspect to bring success to a trader. To support his theory, he experimented and found that only 1 out of 120 traders could adapt his brain to a new system and others failed to succeed with a system that proved to be useful in 19 out of 20 years.
Many people look for security when it comes to choosing their career and if somebody’s trying to find that in trading, then it is the wrong choice they are looking at. Trading is the most insecure business one can get them into. According to Welz, trading is a profession that creates so many emotions in such a way that a trader not only remains a trader of money and assets but becomes money meaning that ‘a trader’s emotions are directly converting into the money’.
Therefore, it becomes essential to have the right mindset while trading and yet it is very difficult to break our mind free from the factors that dictate the functioning of our brain and thus our behavior. Changing these patterns is not only difficult but also challenging and yet it is the much-needed change!
Welz’s approach involves working on the subconscious part of the brain and hypnosis. The trainees are put in a trusting mood necessary abilities are fastened into the sub-conscious part of the trainees. It can sound a little weird but if we say that Welz has devoted years of his life to helping people overcome their fears enabling them to even win the Olympic championship. By activating the right energy, behavior, and motivation, Welz has helped traders to earn more money. According to Welz, every human being has a set of metal barriers that are required to be crossed to achieve success and that’s what he’s doing to help people to cross order to act at the best of their potential.
Modifying one’s behavior in a particular direction to overcome the mental barrier can help in building the Trading discipline and Welz goes on to say that a trading brain connects the right knowledge of market and investment with the correct mental capabilities.
“Developing an effective trading brain involves a personality modification and people who don’t bother to attempt this shouldn’t go for trading”, suggests Welz. Traders who focus only on logical aspects of charts and trends will ultimately struggle with the countless emotions that mostly dominate the market.
The above explanation of the Welz approach is short but enough to grasp the concept. For further research and analysis, Trading Psychologie by Norman Welz can be read.
Norman Welz believes that anyone can become a trader, provided they are not clinically ill if they can work on overcoming their fears and anxieties. To get success, they need to have a strong hold on reality, apart from the financial knowledge and skills that are prerequisite to have to develop a trading brain.
Learning the technical aspects of trading is a straightforward task but developing psychology based on trading is a bit complex thing that requires firm dedication and hard work to work on one’s personality traits to eliminate deep-rooted behaviors that sub-consciously affect the decision making based on emotions. The process takes time and often requires help from a skilled coach. However, the results are outstanding in terms of dividends and long term success in trading.
Trading psychology refers to the mental state of a trader during the time they spend in the market. It’s one thing that can determine the success and failure of a trader in the financial market.
Getting the right mental makeover is not an easy task and not many traders manage to have it. However, certain traits like emotion-containing, quick decision making, and exercising trading discipline can be inculcated in an individual to move towards the right mindset.
Developing an effective trading brain involves a personality modification and people who don’t bother to attempt this shouldn’t go for trading
