How Is Your Brain Wired Up? Are You a Buyer or a Seller?

Do you have a trading bias? Or are you one of the lucky traders who is comfortable on both sides

The guest article is written by Robert Taylor. He is a professional Forex trader who offers training and mentoring for new and experienced traders who are struggling to make money consistently from the markets on his website

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Robert Taylor
Robert Taylor

I read an article on the website written by Chris Capre titled Your Brain Is Biased.

Now although it covers some good stuff, I would like to add my views on the subject of trader psychology.

Trader psychology does play a very important role in trading, fear and greed and all that, but if you have been trading a while, as I have, then there are some interesting characteristics that you may be applying to your trading behaviour, without actually realizing it.

I have been trading for almost 25 years. I first started trading equities in the early 90’s.

When I first started trading we did not have all the sophisticated charting software that we have today. I remember plotting my first charts on graph paper that I purchased from a local stationery supplier.

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I first started as a retail trader, plotting my charts by hand with end of the day prices taken from the Financial Times. I used to buy on dips following the long-term trend. I had never heard of shorting, and with the limited resources available to me, I only really had the option to buy stock. So my brain was conditioned to only look for buying opportunities.

Even now when I am trading I always feel more comfortable when buying rather than selling. These early trading experiences have shaped my trading psychology to this day, and there will be others in the same mindset too.

If you started out in equities as I did, there is a good chance you will be more comfortable with long positions, rather than short positions, as I am. This bias does not stop me from taking short trades, but it just feels a little more normal when I am long.

If you keep a trading diary as most traders do, it would be a good idea to look back at the trades you have taken, and compare long trades against short trades. Are you taking more longs than shorts, or vice versa? Also look at the profitability of your longs versus your shorts.

In his article Chris talks about trying to stay in profitable trades for longer. So check that too. Are you mostly staying in long trades or short trades?

Knowledge is the biggest asset to trading profitability in my opinion, but it will help your trading if you can understand your trading behaviour, and recognize any trading bias that you may have.

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