Individual psychology is also important in trading. We all go through the same biases- greed, fear, the need to be right (most traders do not even realize how much the need to be right effects their subconscious) and much more.
Also, studies have shown patterns in individual psychology that effects the way traders thing. An example is that studies have shown that, when incorrect suggestions have been placed, a person loses the ability to make a logical decision….
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Trader psychology revolves around crowd psychology. Crowds act much differently. Crowds lose the ability to think individually, they act irrational, they search for a leader, they act very primitive, and they follow very predictable patterns.
An example is that if you take a crowd of people, and place them in a particular situation, the crowd will react in a pattern (a certain percent will do this, a certain percent will do that, etc). Then, if you remove the crowd, and form a new crowd of people, a similar percent of people will react in similar ways. In other words, each time you place a crowd into the same situation, close to the same percentage of the crowd will have the same reactions over and over again.
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