Principles of Trading Psychology

Search more about ways of benefiting your trading. Find the main principles that advantage specifically to trading psychology; get to know why you have to know about them.
Principles of Trading Psychology

The fourth principle: Much pattern recognition is based on implicit learning
There are situations when people are repeatedly unshielded to complex patterns and eventually internalize principlesthose, even if they cannot verbalize the rules underlying those patterns. In this case we may say about implicit learning. Like children learn language and grammar, it is how we learn to navigate our way through complex social cooperation. Implicit learning is like a "feel" for a performance activity. It assists a rapidity of pattern recognition that would not be possible through ordinary analysis. System developers rely upon explicit signals for trading, and report that their frequent exposure to data gives them a feel for which variables will be promising and which will not during their testing. Implicit learning only happens after we have undergone thousands of learning trials. And researches prove this. And this is the reason why trading talent requires considerable practice and exposure to realistic scenarios. Without such immersive exposure, traders never truly internalize the patterns in their markets and time frames.

The fifth principle: Emotional, cognitive, and physical factors disrupt access to patterns we have acquired implicitly 
Psychology becomes important in upholding consistency of performance when a performer has developed skills and moved along the pass toward competence and expertise. When shifts in our cognitive, emotional, and/or physical states conceal the felt tendencies and intuitions that lie at the heart of implicit learning, then many performance destructions are caused. This most commonly happens as a result of performance disquiet. In this meaning they are our fears about the result of our performance intervene with the access to the knowledge and skills needed to facilitate that performance. When traders trade positions that are too large for their accounts and/or do not maintain sound risk management with their positions, there is an opportunity of performance destruction. Shifts in emotional states that interfere with the (implicit) processing of market data are caused with large P/L swings. Pay your attention to that fact that cognitive, behavioral, and biofeedback methods can be very useful in teaching traders skills for maintaining the "Yoda state" of calm concentration needed to access implicit knowledge.
Training requires constant response about your performance, and a steady process of drilling skills until they become automatic. That's why it is the systematic work on oneself to built skills and hone performance. Training yourself to proficiency is the path to a positive psychology.



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