Participating in today’s market can be very stressful, easily resulting in decisions that we later regret.
Traders and investors justify decisions with data and logic, but in the heat of the moment, it’s emotion that causes us to buy or sell. Everyone faces the same potential mental traps and biases, its how we deal with them that makes the difference. Our beliefs, expectations, and emotions act as a filter on our perception of the market, our filter projects a structure onto the market that forms the basis for our entry and exit decisions.
We don’t see the market itself, we see our projection.
That’s the secret of trading psychology.
It is simply human nature to see things through our own personal filter.