Whether you are in a room full of traders or just ‘feeling them’ online, the truth is, they can influence you.

Crowd mentality is described in psychology as opposed to the individual psyche. 

It is irrational, unconscious, and easy to manipulate. What this means in trading is that if you get into the "zone" of the crowd, which is, in fact, the opposite of "the zone," you may start to make decisions based on emotions, not be able to think or make strategies, and be responsive to signals that are usually not in your best interest.


Crowds versus Individuals

To back up a little, at the beginning of the analysis, a few hundred years ago, crowds were seen in a negative light. 

They were manic, vandalic, and unable to control themselves, causing damage and bad things individuals alone wouldn’t dare. This led to some countries making strict laws against crowd gathering, knowing that it could quickly spiral out of control and hurt all those standing in its way, including those in charge. 

However, recently we have realized that crowds are not necessarily bad. All our systems, including political, governmental, organizational, religious, or even personal, such as families, are based on the crowd mentality. When you go to work, you work with the crowd. When you attend church, you are part of the crowd. You are part of the crowd as you come back to your family.

This expanded definition of "crowd" across all social systems allows us to understand better how crowds operate, their primary characteristics, and their role in trading.


"There are no solutions to any problems. Only the ways of overcoming them by healing, growing, and evolving." 


The main properties of the crowds

1 Unconscious

Your unconscious is triggered as you are part of the crowd. This is why, in the past, the group would turn against those who were wealthy or in charge; they acted on their subconscious accumulation of unfairness and disdain. 

In the past, 1% held most of the wealth while the other 99% got the scrapes. Similarly, if a crowd feels contempt toward individuals with specific characteristics (often minorities) that make them feel angry or hateful, they can start to act violently.

Whether you are aware of it or not, you are part of the crowd when trading. (The "trading crowd," if you will.) As the emotions become high, you may pick that up and become unconscious. 

This means you may freeze, be unable to act and delay the execution of your exit, or act rashly and exit prematurely.


2 Emotional, no thought

If you ever looked at your previous trades and it looked like you weren't thinking at all, well, it may be because you weren't.

One characteristic of a crowd is that they act on impulses from the unconscious. 

If anyone ever told you to expect all your crap to come out in trading, they were entirely correct. All the things you repressed in your subconscious begin to surface as you trade. All judgments, previous pains, fears, and insecurities are all here.


3 Acting according to a common goal or belief

The crowds act with a "hive mind." You start to behave similarly if you are synced with the crowd energy with similar insecurities or triggers. 

This is why you may occasionally feel as if you cannot think clearly while trading. You act automatically, guided by your unconscious beliefs. If these beliefs are negative about yourself, your abilities, or the market, it will all be visible in your trading. You may now think that you already have a positive goal. However, the unconscious trumps your conscious tendencies because of the first point. If your unconscious and conscious are not aligned, you will often act out of character.

For example, one goal of the unconscious mind may be to keep you safe. What "safe" may mean in trading is not necessarily winning but not losing. This, in turn, may go against your goal of being profitable.


"We cannot solve our problems with the same level of thinking that created them." A. Einstein


Ways forward and solutions

You may already be thinking about how not to be influenced by the crowd. After all, in that case, all the negative consequences of the above characteristics could be gone. However, although there are some ways to distance yourself from others, such as not listening to too many gurus or news, or not spending too much time staring at the ticker, and instead choosing to act on the set rules or principles, completely disconnecting from others may not be feasible, nor needed. 

Whether you want it or not, you are part of the crowd. 

The crowd might be an an "invisible crowd," such as on social media, forums, or in trading. It can also be your community, friends, or your family. Sooner or later, something will trigger you, and your negative tendencies will be exposed. 

There might be a better way.


Healing of negative tendencies

Some may not know that, besides being a coach, I'm also a healer. I fully believe that these patterns will keep repeating unless you heal your inner wounds. That is not to say that I believe in psychology or psychoanalysis. Similarly, as the purpose of police or prisons isn't to rehabilitate those committing crimes, and the goal of the medical or pharmaceutical industry isn't enhancement of health, psychoanalysis wasn't created to enhance health and vitality. [Ref1] It is too constrained by the goal of solving the problem.

On the other hand, coaching and healing are concerned with health improvement. They acknowledge the problems enough to be recognized and enough to learn from them. However, it deals with a completely different dimension. It is not necessarily related to your issues; other than that, the issues are gone as you tune into it.



To your trading success,

Ref1) Example about the similarities between psychotherapy and prisons or the medical industry was inspired by the works of B. Williams.