Market Psychology: The Complete Guide
It's 7:00 AM on a Tuesday. Your algorithm just executed a trade on the ES futures contract while you were still in bed. You check your phone, and the tr...
It's 7:00 AM on a Tuesday. Your algorithm just executed a trade on the ES futures contract while you were still in bed. You check your phone, and the trade has already captured 12 ticks. You're not surprised—it's exactly what you programmed your NinjaTrader 8 strategy to do. This isn't luck; it's the result of understanding market psychology, the invisible force that drives every price movement. Market psychology is the collective mood and sentiment of investors that influences financial markets beyond fundamental data like earnings or economic indicators. Emotions like fear, greed, and euphoria can cause markets to move irrationally, creating price swings that defy conventional analysis. Unlike traditional financial theory, market psychology recognizes that human behavior shapes market outcomes as much as, if not more than, objective data. Key fact: According to behavioral economics research, 70-90% of retail traders lose money not because of poor strategy but due to psychological failures in managing fear, greed, and emotional responses to market movements.
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