In addition to the personal superstitions, which traders acquire during the trading process, such as good luck in certain days or hours of the week, a lucky t-shirt, shoes or jeans, there are some superstitious beliefs, which are common to all the traders.
Top-5 Traders’ Superstitious beliefs
Traders believe that after three bad trades in a row it is better to stop trading on this day. If the drawdown is more than 20% - make a break in trades. This superstition is based on human psychology and experience. If an investor has closed trades bearing losses three times in a row, he/she might feel upset, which will definitely affect his/her trading as:
- He might become too cautious and enter the market too late, waiting for the definite signals of market movement, or he/she can enter the market too early in fear of suffering a loss. In both ways profit will reduce and overall yield curve will swoop down.
- Some traders take unreasonable risk, turning trade into a roulette, which inevitably leads to further losses.
A rule of 20 % drawdown is important, because when a trader is suffering significant loss he/she may lose faith in his/her capabilities.
The second superstitious belief is as follows: if trading is successful and several trades in a row bring you profit, you should not change the main parameters of the transaction, in particular, its volume. Trying to receive more profit in the market can scare away your good luck. However, if a trend in the market is changing and stop-losses are activated very often, it is time to stop trading and celebrate your success.
The third superstition is also based on a psychological factor. If everyone says that the market will grow, it is time to sell. The same rule applies when uptrend changes into downtrend. It is particularly relevant when people of influence, such as the heads of governments or ministers assert that the bottom of the crisis is over or that the economy is in its peak. In this case traders should consider a chance of hedging long positions.
The fourth superstitious belief is related with the cheerful mind and good spirits. Any imbalance in the relationships, bad mood, or the fact that you have argued with the loved ones, relatives or a family can become a reason for avoiding risks or being more careful in trading.
The last of top 5 is a rule not to count potential profit. It is also not good to calculate the profit which you has already earned, but have not yet received. You can just dream on what you will spend your money.
Traders’ signs and tokens omens
Belief in the omens is not based on the sound foundation. Just year after year they work and prove to be correct, no matter if you believe in them or not. One of the most popular token is to keep a figure of the bull on your desk. It is believed that a bull symbolizes uptrend. If a bull falls off the desk, be prepared to suffer a loss.
Other interesting tokens:
- If you trade wearing black clothes you will suffer losses. Professional traders believe that it is better to trade wearing bright color clothes.
- If it rains, a trader should avoid opening long positions, and hedge your current positions. This superstition does not tell you what to do if it snows or there is a thunder storm.
- If you have drunk alcohol, do not start trading. However, here opinions differ, as some people believe that a glass of wine helps them relax and takes easy changes in the market. On the other hand, alcohol makes people disoriented, so they stop being logical, which can negatively affect trading.
- You traded successfully yesterday? Today, you shall wear the same clothes as yesterday.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.