Trading tips explained with Science!
Pretty much anything in the world can be explained through science. But what about something that can be done without any type of technology or a natural event? How do we explain that? Well, it actually comes down to chemical reactions in our brain that stimulate the way we react to trade, be it successful or unsuccessful.
Currently, there are two ways that people trade in the modern world. You can put on your clothes and venture out into a nearby market, where you will have direct contact with the vendors. Or you can stay home and trade on the internet. Interestingly enough, these two variations of the same activity have different effects on ourselves. Let’s tackle the online trading aspect for now.
The initial state of mind
There is no denying that when venturing into something that could potentially cause stress, it is recommended that you have an initial good mood or have the least amount of things bothering you. By having that sorted out, you can devote 100% of your attention to the task at hand. It is quite natural.
For example, the people in the Nordic countries have a perfect balance of Dopamine and Serotonin in their brain. The reason being is that life is not as taxing there as other countries. Because of this, they have more of a clear head when engaging in a trade or commerce. In fact, some Norwegian Forex brokers have mentioned that Nordic customers are far more likely to engage in a risky trade than any other customer from Europe. The reasoning of these people is quite simple.
The balance of Serotonin and Dopamine in their brain allows for this “care-free” approach when trading. The financial stability of most of the population is also a huge factor. Let’s break it down. The Dopamine basically whispers to the trader “Even if we lose this trade, we will still be good” and the Serotonin whisper “We have so much already, so let’s get some more”. Basically, the trader, thanks to these 2 chemicals feels both calm and determined, maximizing his trading capabilities.
Not seeing actual gains
You see, when you are trading online, it is hard to generate Dopamine and Serotonin. The reasoning is quite simple. We may be sophisticated with technology as a species, but the chemicals and natural reactions in our bodies are not. Therefore, when you see a number become green on the screen after a trade, it is not as impactful as having the money be just handed over to you physically.
This is actually the primary reason why people are so easily addicted to gambling. The gambling process is instant gratification, you win and you get the money that you can touch bombarding you with Dopamine while your Serotonin are fading and fading away.
While just looking at a number grow on your screen does not have as much of an impact. Sure your mind may understand it, but the amount of Dopamine and Serotonin you receive will be nothing compared to actually receiving the money physically.
Why people over-trade
These chemicals are not just small rewards after successful or unsuccessful trades. They can be quite dangerous in the long run actually. The reasoning is quite simple. These chemicals are sometimes responsible for our moods. In fact, I’d say that Dopamine is directly responsible for one’s mood. Therefore, a streak of losses can really damage a trader’s Dopamine supply, making him depressed and desperate. You see, when people become desperate to get back the money they lost, their mind doesn’t think the same thing. You see, for you, it may seem that you want to get the money back, but for your brain, it’s about getting more dopamine.
How to avoid ruining the balance
The procedure is actually quite hard. There is no magic app or implant you can have that displays the amount of Dopamine and Serotonin you have in your body at a given moment. Therefore, you need to adapt to the cues your body gives you when there is no balance.
These cues could be:
- Massive disinterest in the process
- Inability to focus
- Dry mouth
- Weak muscles
If you ever feel these things during a trade, it is recommended that no matter how much you’re winning or losing to close it, take a break and find other means to fill up on Dopamine. Usually, just having a good meal is enough to completely recuperate your Dopamine reserves. If you are feeling disinterest in the process or just feel angry, then this might be due to a lack of Serotonin. The best way to stock up on this chemical is to go for a workout or take a cold shower. The more Serotonin you have, the more you’re resilient to stress and tiredness and you become.