By Shivansh Bhasin, Founder, and CEO, The Investrology

The pattern of investment has changed over the years. While people from the older generation prefer to stick to the old mode of investments like fixed deposits (FDs) or gold, millennials explore several investment options ranging from stock markets to crypto.

One of the most neglected aspects among many investors is mental discipline. In one of the recent interviews, Canadian billionaire investor Chamath Palihapitiya mentioned that successful investing is all about behaviour and psychology and even the best model or analysis in the world may prove to be of no use if investors press the panic button during tough times.

Some traders have such high standards that they overthink and over analyse market data before entering or exiting a trade. This often leads to hesitation and self-reproach and tends to undermine ones trading strategy.

Although a fairly ignored aspect, trading psychology plays a major role in shaping the behaviour of an investor in the stock market. Trading psychology denotes the emotional and mental state of an investor that helps them decide the pattern of trading.

You are likely to have several thoughts in your head, arguing for and against taking, entries or profits. Experiencing such a dilemma is known as Cognitive Dissonance. In the field of psychology, cognitive dissonance is the mental discomfort psychological stress experienced by a trader who holds two contradictory beliefs or ideas. This discomfort is triggered by a situation in which a persons belief clashes with new evidence perceived by the person.

Trading psychology can both positively and negatively impact the trading actions of an individual.

For that it is important to identify what your trading psychology is so that you can work on it accordingly. Here are a few ways to understand if your psychology is affecting your trading behavior in the stock market or not.

Some of the ways to deal with negative traits include:

You have power over your mind not outside events. Realise this, and you will find strength said Marcus Aurelius, a Roman philosopher. His words hold true even today.

After facing a couple of losses, it is likely to feel frustrated. At such a time, you could focus more on trading your strategy and sticking with your trading plan because youd know that these are the only things you can control. Youd also focus on improving the way you respond so that you dont let yourself get bullied by your emotions. In the nutshell we could say To study the market is to study human behavior, and to study Human Behavior is to study Yourself.

Here is the original post:
Want to make better gains? Know the behaviour pattern that would help you - The Financial Express