How To Trade Blog: December 2021

Wednesday, December 8, 2021

Newbie Trading Psychology: When Traders Are Chickens

This is another funny story about trading psychology like the Crowd psychology in the previous article. Today, we’ll go to a restaurant, which is very famous for its Newbie BBQ Chicken dishes.

BBQ Chicken

Unlike the industrial way of raising chickens, the American West is famous for its grilled BBQ chicken. People let the chickens out in the garden, let them walk around so that the meat is firm and tastier. One day, a customer came into a restaurant.

– Hello.

– Yes! The chef hastily ran out

– Mr. Market wants to eat BBQ chicken?

– Yes. Please wait for 30 minutes.

The chef went to the garden, began to throw the rice on the ground so that chickens slowly gathered.

After a while of rolling his eyes to see which chickens are qualified for “meat”, he used a basket (a tool that specializes in catching chickens) and… yup.

The chicken flapped its wings in the basket, trying to struggle. The chef reached in, strangled the chicken, and pulled it out. After feathering and cleaning, BBQ chicken started to be served to Mr. Market.

Do you see yourself in it? Probably not. Now we’re back to reality with Newbie’s story.

One fine day, Newbie surfed Facebook, Youtube, etc. Some money-making pictures caught his eyes. Newbie is curious and clicks to view and join Telegram groups. Here, the group owners began to show off their knowledge, show off their money and how to get rich…

Is it easy to make money? Newbie began thinking. At first, he didn’t believe it. The second time, Newbie started to notice. For the 5th time, he started to learn. For the 10th time, he opened an account and deposited to become a trader. And… he lost all his money to the market.

So what do you think? Are new traders any different from chickens? Are the teachers, experts, YouTubers… any different from the chef? And of course, the person enjoying the BBQ chicken is still Mr. Market.

What is Newbie’s trading psychology?

I know have many types of new trader’ trading psychology like greedy, FOMO, curious, active, confident… Let me go deeper for you to understand.

Chicken Fomo

After surfing Facebook, seeing the newsfeed of friends all talking about Bitcoin, everyone says that coming is a great opportunity for Crypto. Being afraid of missing the opportunity to make money, “chicken” also started to trade Coin.

This type of “chicken” has no knowledge. So when seeing what other people do, he imitates it. As a result, he either gets scammed or loses every penny in his pocket.

This is exactly how the market works. When the price is hot, the media constantly reports with a lot of attractive news to pull money from new people (without knowledge) to the market. Then, they will be “trimmed” gently.

Must-read articles:

– What is Fomo? Why is Fomo dangerous?

– Crowd psychology.

Active chicken

This is the type of “chicken” that you can easily come across. They have the knowledge, know how to analyze and predict, or trade with a Demo account. But they merely have any real profit.

Trading and making money in the market is a psychological game, where the person with bravery, patience, and discipline is the winner. On the contrary, being too active will easily lose money. The “active chickens” like to flap their wings, like drawing charts with indicators, and then fall into a vortex. Find a trading strategy => lose money => try to find another strategy => and lose money again…

Greedy chicken

This type of “chicken” likes to look at other people’s wallets. They want to get rich quickly. Therefore, when entering the market, they trade continuously with large volumes.

Of course, in the first few trades, Mr. Market “throws the rice”, feeds and fattens his chickens. Then, when the “chicken” has enough weight, it will become a delicious dish for him.

What are you wondering?

Newbie is chicken?

Your question may be Is it true that being a new trader is a chicken?

The answer is that’s right.

You can learn, learn more, have more knowledge. But trading psychology or emotions are the problem in the game of money. Does anyone tell you that?

Let’s think about it. The market as we know it has been around for hundreds of years. Knowledge abounds online. You can find them by Google, by Youtube… anyone can learn. And then, 95% of traders still lose money to the market.

Again, those who think that just learning knowledge about technical analysis, fundamental analysis… is enough to make money in the market, really are chickens.

How to get out of the chicken life?

The answer is money and time. These are the two things that Newbies have to put into the market in exchange for experience. No one can help them but themselves.

No one tells the “chicken” that the game of money is a game of psychology. Whether the price rises or falls, it affects emotions, “Chicken” will gradually lose control, forgetting all the knowledge learned.

Each person’s knowledge and awareness will help them lose less money and time and realize more problems in the process.

In short, if you have the knowledge and experience, you will have a chance to get out of the chicken life. Otherwise, you will forever be just a delicious meal for others.

So how can Newbie make money?

Reply: Let’s become a chef.

Look and do the same as what the chef has done.

– Become a Youtuber, who draws, makes videos to share trading strategies to make money from Youtube.

– Be a teacher or an analyst, who shows knowledge and predict to make money for teaching.

– Become an IB (Introduce Broker), showing off your account and money to have customers register with your affiliate link.

……..

What if you want to become a trader? Spend money and time buying psychological experiences.

Your question should be Why doesn’t any trader show you a 1-year history of trading and making money from Forex?

Answer: For those who can money from the market for real, they do it in silence. They don’t need to do youtube, be experts, or Ibs. They just need to focus on the market and make money.

Conclusion

The game of money is a game of psychology. Newcomers to this market, no matter what they do, will still have to spend time and money in exchange for emotional experiences.

Hope you understand what I’m saying in this post. Love!!!

The post Newbie Trading Psychology: When Traders Are Chickens appeared first on How To Trade Blog.

source https://howtotradeblog.com/newbie-trading-psychology/

Wednesday, December 1, 2021

Crowd Psychology: The Law Of Greed And Fear In The Market

Before getting into this extremely important article, I will tell you a story. It’s about the crowd psychology of the Bull and Bear forest.

Bull and Bear forest

Once upon a time!

In a certain forest, 3 bulls were looking for food. They accidentally got lost in a forest and saw a lot of young grass.

Naturally, 3 bulls ran into the pasture to enjoy. Suddenly, 5 bears appeared to attack and chase bulls. 3 weak bulls run away!!!!!

Bulls were not gentle. They couldn’t ignore such delicious food so they called their friends. 3 bulls call a whole herd of more than a dozen bulls back into the forest to chase away the bears. Besides, the bulls spread the news, calling all the other healthy bulls near and far to attack together.

The deeper into the forest, the more grass. But the bears are crowded and extremely aggressive. The war at this time was extremely fierce. No one gave up on either side, just like that.

At this time, almost all the bulls in the forest participated in the war. To strengthen their position, the bulls called many other animals that did not have the fighting power to come in such as deer, chicken, pig, dog… There are even mice.

The other animals didn’t know the truth. They just heard from bulls that there was a lot of food so they followed. All of them tried to spread the word to get more support to fight the bears.

They outnumbered the bears and won the fight. BUT NOW, the first 3 bulls and their herd that had participated in the initial fight were full. They silently left, leaving behind chickens, pigs, deer, etc. in the forest.

At that time, the bears began to counterattack. A loud roar awakened the chickens and pigs. Now, without the bulls to protect, the chickens and pigs began to run away, screaming and trampling each other.

What is the outcome? The bulls were full and retreated to their home to rest and recuperate. What about the bears? They freely tore the chickens and pigs… And just like that, when the bears were full, they were not interested in war with the bulls. Thus, they retreated to the forest. At this point, the herd of bulls has recovered and begins a new feeding cycle.

The story of the deep forest repeats itself. Bears and bulls have their turn getting full, while pigs, chickens, deer, dogs… get butchered.

Imagine the market that you and I are trading is the forest above. Then, who are you and I? A bear and a bull? Or a pig and a chicken?

Crowd psychology is the law of the market

If you may not have noticed, let me illustrate a period of GOLD (2007 – 2012) on the monthly chart.

(1) The first is the foraging process of the bulls. The gold price during this period went sideways.

(2) Suddenly, the bulls found the pasture near a forest and rushed to eat grass. The gold price increased sharply, from $670 to more than $1000.

Stage 1 and 2: Herd of bulls was eating grass

(3) The bears at this time came in and chased the bulls. The gold price decreased from $1025 to $725.

Stage 3: The bears came in and chased the bulls

(4) Now, the Bull called more friends and spread the news about food to other animals. All of them fiercely rushed into the forest to save the grass and fight the bears. The price of gold increased sharply, from $725 at the end of 2008 to $1900 at the end of 2011.

Stage 4: The bull called more friends and other animals to attack together

(5) The bulls were full and silently left the forest. The price started to distribute the top and moved sideways in the range of $1550 to $1800.

Stage 5: The bulls were full and silently left the forest

(6) When the Bear knew for sure that the Bull had retreated. A general attack broke out. All the pigs, chickens, deer, etc. became delicious prey for the bears. The gold price fell sharply from $1770 to $1200.

After a while butchering the pigs and chickens, the bears were full. They retreated into the forest. The forest was now in equilibrium again.

Let me show you the full picture of the market during this period.

How to take advantage of Crowd Psychology

‘Be Fearful When Others Are Greedy and Greedy When Others Are Fearful’

This is the most quintessential saying about crowd psychology. Most of the participants in the market (Coin, Gold, Forex, Stocks…) are chickens, pigs, deer… They are animals with no fighting power in the market. When they appear, that’s the moment you should quietly leave.

On the contrary, the chickens and pigs after a period of being slaughtered by the bears began to fear. That is when the bears are full and the bulls will sooner or later return to the process of feeding. This is when you enter the market.

That is the rule. It has existed for thousands of years in any market.

Think about it! Let’s go to an example of the Coin market of the years 2017-2018.

Bitcoin from 2017 – 2018

This is the full picture of Bitcoin in two years from 2017 to 2018.

(i) Before October 2017, BTC (Bitcoin) price was only sideways and fluctuated below $5,000.

(ii) Suddenly, huge cash flow poured into the market. In 2 months (from October to December), BTC price from $5,000 flew straight up to nearly $20,000.

(iii) Now, the press, media reported about BTC. The whole world started talking about BTC. Non-combatant animals (dogs, pigs, chickens…) started appearing and entering the market. They said BTC would increase to 100,000$ and be the common currency of the future…. Those who call themselves investors have been pouring money into buying Bitcoin continuously.

(iv) In the end, when everyone traded and talked about BTC, its price went from $17,000 to $6,000. Most of the money of retail investors is the reward for the Bears.

Once again, the Law of Market Psychology is applied. Delicious food is never for the masses. So, when you see the crowd starting to get greedy and rush into the market, leave quietly.

Summary

At the end of each wave, when the bulls leave, positive news will appear. A series of good indicators, good articles will be published to stimulate the crowd psychology to participate in the market.

Remember that when non-combatant animals enter the market, that is the most dangerous time. If you don’t leave quickly, the bears will tear you apart.

Many thanks to Zet UG – who gives me such good examples.

Love!!

The post Crowd Psychology: The Law Of Greed And Fear In The Market appeared first on How To Trade Blog.

source https://howtotradeblog.com/crowd-psychology/