Visual Psychology
Last updated
Last updated
Visual psychology is the study of how visual stimuli affect our behavior and decision-making. In the context of trading, it refers to how the visual representation of market trends can influence a trader's decision to buy or sell.
When a trader sees a huge trend on green, it can create a sense of excitement and optimism. This can lead the trader to want to go long, or buy into the market in the hopes of making a profit. However, this decision may not be based on your strategy or analysis but rather on the emotional response to the visual stimulus.
This is known as the "herding effect," where traders follow the crowd and make decisions based on the actions of others, rather than their own analysis. This can be dangerous, as it can lead to impulsive and irrational decisions that may not be in the trader's best interest.
To avoid falling prey to the herding effect, traders should focus on developing a solid trading strategy based on sound analysis and risk management principles. You can also try changing the colors of their candles to help reduce the impact of visual psychology on their decision-making. For example, using a neutral color scheme or switching to a different chart type can help to reduce the emotional response to visual stimuli and encourage more rational decision-making. If you are not an experienced trader and are still struggling to be profitable on the market and think that your bias is constantly shifting, try this: Default Chart Here you can see how you could've been tempted to go short or long because of the amount of consecutive red and green candles. However, in the example below, you can see and feel how this abstract force that makes you change your bias often, is disappeared.
Gray Scale Chart In this example, you can clearly see how everything calms down and allows you to think better and act wiser based on your strategy edge.
Remember this is just an example, and you can customize your charts as you like, use the configuration that suits you the best!