Psychology of the first trade

Most part of beginning traders neglect psychological factor of market trading. However, over the time, everyone of them comes to an idea that psychology is 90% of trading success. Why does psychology impact so strong on resukts of trading? The main factor us that while looking at market a person percepts signals through the lense of one's knowledge and experience, which also includes fear, greed etc.

Let's take two traders each made by one trade, but the first one will have profitable trade and the second one will have loss-making trade.

We will analyze behavior of traders. Let's think their experience is pretty moderate and is equal.

Upon making a profitable trade, the first trader will be encouraged with a successful start of the day, will think about reserve money to cover a potential loss and will have more ease in actions. On the one hand, it gives free play to looking for situations with better results, on the other, it can dull attention and as a consequence, to cause more harm than good.

Now we will pay attention to the second trader having loss. What can be his feelings about? Desperation, offense, desire to play back and at the same time fear to repeat previous result. This conglomerate of controversies will enchain inexperienced trader and won't prevent him from unbiased estimation.

This example is good in demonstrating of what can cause ups and downs of novices, when there is no stability and account balance graph looks like roller-coaster. All that can be caused by result of the first trade (for scalpers and intraday traders it is usually the first half of day, and the first trade in week for middle-term traders)

How not to panic or not to fall into euphoria after the first trade and continue trading with impartial determination?

One of options is to separate trades' results each from other and take them as occasional, whereas you should understand that a series of trades with occasional result can give a positive outcome.

In the result we come to such notion as trader's performance on distance range.

A scalper with 50 and more trades per day can in the most part of cases be estimated as per one day results. 50 trades include loss-making and profitable, but according to total results there will be more profitable transactions. This very conclusion should dominate in trader's mind not to let the first trade of day perplex him for the rest of time.