In the psychological aspect of Gann theory it is of great importance.
The volatility and unpredictability of financial markets require nerves operators balances and continuous critical analysis of their actions. One of the errors that are committed more frequently by the operators, the emotion is the most common; control fear, hope and greed is the first task that every good trader should be.
Base their speculative actions on the evidence of the facts is only possible by making a
Trading-Plan before operating, since, hope or expectations are manifested with such a charm to also divert best operator; act according to rumors or on the basis of false hope is unfortunately a recurring behavior, which often leads to withstand even heavy losses before closing the position.
A healthy fear of the market is according Gann the first signal that reveals the potential of successful trader. Speculating is a business where the losses are inevitable physiological and to a certain extent. The trader that after speculation monetizes a loss and not get excited over is so mature enough to do its job. The feeling of fear, which must be avoided, it is rather what brings us to sell at the minimum, for fear of seeing still down prices or buying at the highest, for fear of not being able to exploit the upside.
Greed, or the desire to improve their position is another personal aspect that you have to dominate. Greed stimulates emotion and this can lead the operator to hope that the market still follows his expectations and can also be induced to invest an amount not justified by good money management rules.
To have, therefore, an approach logical rather than emotional, you must draw up in advance an operational plan or Trading-plan that allows us to establish exactly the operations that we want to do. According to Gann the most important thing to do when you draw up an operational plan, is to fix the signals of Stop-loss or fixing of price levels, beyond which is given a "coherent" order to buy or sell. This is the only means to control and thus limit the possible losses.
The operational plan is essential to avoid suffering a kind of emotional behavior when operating in financial markets. Obviously once drafted the Trading-plan is essential to follow him without being misled by emotional factors as we have already stated.
Speculating is a profession where the losses are inevitable and to some extent functional.
Good Trading to All !!!