The Psychology of Speculative Financial Retail Trading : Optimizing performance by developing a performance-based thinking

Abstract

This thesis investigates the psychological challenges which retail traders face when trading on the financial markets. Many brokers have reported that a significant amount of retail traders lose their capital within a matter of months. The potential causes for this phenomenon to take place are examined in this thesis by using relevant literatures and exploiting recent data from the financial markets. The raw data were obtained from Trading View platform, and Comparative Analysis (CA) was used in this study to compare different analytical results. The study emphasised on the technical side of the trading due to its mechanical nature which can be systematically defined and organized. The study found that it is hard for the traders to stick to their trading plan, however, they become irrational when they are exposed to uncertainty in the live markets. The result also found that technical analysis is a skill which can be learned and crafted compared to psychology analysis which is more complicated.