It’s widely acknowledged that there are many different factors that affect the value of assets and the volatility of financial markets, but more thought could go into what affects traders themselves. After all, they are the ones who make the decisions on where their money is invested and ultimately shape everything else in the market.
This is particularly true in markets like the stock market, where the decisions people make can have a direct impact on the success of their portfolios.
Trading on the stock market has many advantages and, as such, it’s become popular with more than just professional traders and brokers, but also individuals who want to enhance their income and learn a new skill.
These traders need to understand what can impact on their decisions and the returns they achieve as a result. To help traders looking to improve their returns to understand the factors that could be limiting them, we’ve created a list of some of the more unusual things that have an influence on trading and how traders can improve their performance.
In any market, the time of day at which you trade will have an effect on the success of your trades and depend on your goals and risk appetite. For example, more risk averse market participants might consider trading in the middle of the working day. This is because at the beginning and end of the day there is a flurry of activity, which can be very confusing, so it can be best to wait until the market has calmed down and then explore the opportunities that will improve your returns.
However, for some, the volatility of a market’s open and close can provide some exciting opportunities to trade and take profits.
Your mood and emotions both have a strong impact on the way you operate, particularly while trading fast-paced, short-term products such as spread bets. It’s clear from this research by IG that there are a number of different psychological factors that affect trading, so explore those that are relevant to you and try to make sure that you’re in a certain mood before you start trading or investing.
This may involve listening to a certain genre of music or doing a specific activity like exercise right before you start trading. Whatever you need to do, get yourself into the right mindset before you start trading so that you can maximise your chances of making profitable decisions.
The Food You Eat
Diet and the health of your digestive system have a strong link to the way your mind functions, so it’s important that you try to optimise your diet for trading. Some foods are proven to help increase concentration and memory, so try to incorporate these into your diet to improve these functions and help you when you’re trading.
In general, it’s a good idea to reduce the amount of processed foods you eat, as these contain many chemicals and ingredients that can make you feel full and sluggish. It’s easier said than done but try to make your own snacks and meals where you can, and then treat yourself at certain times so that you don’t miss out on your favourite foods but are still fit and healthy to continue dealing on financial markets and making profitable trades.
Your Long-Term Goals
Often, speculating on financial markets can make you focus on shorter-term returns, but it’s equally important that you think about your life plan and where you want to be financially in the future. Make sure that you look at every trade – even short-term ones – as a part of your longer-term plan, so that you make the most out of every decision. In this way, you can set realistic goals of where you will be financially in the future and how you can achieve the income you want.
At the end of the day, the most important thing about trading or investing is that you make the returns you want. Anyone who struggles to trade or finds that their strategy is losing them money should stop and work with a dedicated broker or teacher to learn about how to make a profit from their trades. Be proactive if you start making big losses so that your actions don’t have an adverse effect on your mental health and future prospects.