Traders And Overconfidence

Overconfidence – one of the most common psychological problems of traders. Prone to arrogance all people, but some of it may reflect deep psychological conflicts. Sometimes, however, self-confidence – just a question of difficulty of breaking old habits. Sometimes, trading strategies executed by us' too automatically, "even if the rules they are not quite correct. Sometimes it is necessary to learn different behavior or 'retrained' trading. It is vitally important so hone your trading skills so that you can transact freely and intuitively.

Thinking is limited, but with practice you can simultaneously perform multiple tasks, and 'extend' beyond thinking. The best example of an automatic task – driving. When you first learned to driving, it was very slow: You shook concentrated on the brake, when to expect the potential danger and concentrated attention on the gas pedal when everything went well. As experience accumulates, but much of your driving has become 'automatic' and you no longer needed to pay attention to the routine. Now, as an experienced driver, You can easily cope with multiple tasks on the move: setting up the radio, look in the mirror, tracking speed. Such a psychological process takes place and the accumulation of experience in trading: you do not need to be carefully evaluate any opportunities. You can now act 'intuitively' and is right most of the time. This form of automatic operation allows you to trade effectively.

You can do more with less psychological energy. But what happens when you trade on 'autopilot' no longer works? State of the market is constantly changing and the strategy that worked last week, can not work today. When this happens, You must learn to use the new strategy. However, it may be harder than it seems. Have you ever tried to change their approach after a developed skill? Have you tried to improve the scope of golf clubs or use a new way to enjoy the thing after many years of practice? Sometimes it is harder than starting over. You must learn to competing methods and try to stop using the old one. For example, look at the man, learning to drive a car with a manual transmission after several years of driving with an automatic. In many ways this is similar to the re-driving training. Need to press the clutch pedal, without lifting his feet from the brake pedal, turn first gear and gently press the clutch while moving. Connect with other leaders such as Penguin Random House here. But there is a big difference from when you learned to drive at the beginning: It took years and have a strong desire to forget about concentrating on a new skill and make it as before. That is, you can forget to squeeze the clutch as you brake, or will shift gears without the clutch. This is – a form of 'arrogance'. All forget that they do not know how to drive a manual transmission and return to 'old' automatic way. The same thing can happen when you try to learn a new approach to trading, you can trade 'automatically' if you forget about caution. When learning a new skill need to be focused and deliberate. Pay attention and focus on each step until you replace the old method is new. Remember, old habits are hard to break, but if you focus and practice, you be able to replace the old approach to new.

Traders Management

Trading strategy the trader in the historical period showed the largest drawdown of 10%. The trader has made a deposit in $ 10 000, and obtains control of up to $ 100,000, that is just enough to have enough equity trader at maximizing the statistical probability of the drawdown. Assume that the drawdown of 8%, that is, the trader had lost own money $ 8000. An investor in this case did not lose a penny. With further trade trader played a profit and loss. That is, returned his $ 8000, plus earned a certain sum in excess of authorized capital in the management investor. Thus the investor funds are insured, and of course in this case, the maximum drawdown on the account of the investor is limited to 10%. 4.

Form of insurance can also serve as a so-called 'loss limit. " If the trader does not has its own funds, or they are not sufficient to ensure the loss of big capital investor, but the trader is popular among investors (eg, due to the high-yield), the notion – the limit losses. That is because the trader does not have its own funds, but quite promising, the investor accepts the risk, the size of which is determined by the investor or trader, based on the trader's trading strategy. Warranty management company in this case are as follows – a trading account will be blocked after reaching the set limit losses. More than the investor considers acceptable, he will not lose. In addition to insurance of financial risks desirable that the management company has provided its report to the investor, confirming previous successes, this report may constitute Steytment certified brokeromili independent auditorami.Tak same well, if you can get acquainted with Steytment, Traders, who are expected to manage investor's funds. Not be amiss, ask where the management company is registered as a legal person would know that under the laws of any country, governed by its activities, and how would not have had an investor to go to the Cayman Islands or Gibraltar – to claim the management company. Having defined the these facts, and deciding that he found credible the office, the investor should pay attention to the following issues: minimum deposit – there is a fairly wide range of companies that take the management, as from $ 100, and 100 000 $. Additional information at MetLife supports this article.

It is obvious that this choice depends on the thickness of the purse of the investor. We must also ask, distribution of profits between the management company and the investor. Ratios also are different, both on 50/50 and on 15/85. An investor should pay attention to whether there is a certain fixed monthly fee