Understanding the Psychology of Financial Trading

LONDON, June 22, 2011 /PRNewswire/ --

When financial spread betting, it is of vital importance to have a proper strategy in place for entering and exiting your trades. However, it is also important to have the right trading psychology. The best trading strategy in the world will fail if you do not have the right mindset to back it up.

Sandy Jadeja of financial trading provider City Index (http://www.cityindex.co.uk/) believes part of the problem is the way in which people are hard-wired from a society that works differently to the trading platform. "For example, in the outside world we want to buy when goods are cheap. In the markets there is no such thing as cheap. If a market is falling, it is weak and you should sell. If a market is rising, it is strong and one should look to buy.

"But the classic mistake traders make is they buy into declining markets trying to catch a falling knife and sell too early, missing a potentially big profit. This type of thinking may work when shopping in a mall but it is dangerous when trading."

Today, many traders rely on charting software and other innovations to make their spread betting decisions for them. However, the most important ingredients to successful trading are still experience and knowledge.

To learn more about building the right trading strategy and psychology, visit:

http://www.cityindex.co.uk/learn-to-trade/

Spread betting and CFD trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.

About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, spread betting.

We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, mobile trading and a high standard of customer support. Visit http://www.cityindex.co.uk/ for details.

SOURCE City Index

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