Emotions in Forex Trading
The most crucial element for a successful trader is to maintain a healthy psychological outlook while trading. This is often overlooked by many traders. No matter how skilled you may be as a trader, you need to be emotionally strong. At the end of the day, if you are unable to cope with the stress of the currency market fluctuations and unpredictable nature, you will not withstand the test of time.
Good traders need to be emotionally detached in making trading decisions. Your trading decisions must be independent of fear and greed. One of the attributes of good traders is that they accept losing. They make decisions based on an intellectual level. Traders who get emotionally involved in trading make substantial errors. After a few losing trades, they try to whimsically change their strategies or after a few winning trades become carefree.
Good traders are emotionally balanced. In the midst of a losing streak, they try to take a break before fear or greed starts to dominate their strategy. You cannot win every trade; you must be psychologically strong enough to cope with losses. Even very successful traders go through stretches of losing trades but they are emotionally strong enough to cope with it.
If you are going through a bad stretch in your trading, take a few days off from watching the markets. Try to clear your mind. You should think of taking a break. It can breed greater losses and ruin your psychological confidence, if you keep on trading relentlessly during tough market conditions.
Make no mistake about it. No matter how much you study, practice and trade; there will be losing trades throughout your trading career. The key is to make them small enough in order to live to trade another day. You can overcome a lot of bad luck in your trading by using good money management rules.
You need to control your emotions in order to become a master trader. One constant is the human emotional behavior despite many new methods that have been introduced to traders. After all, markets are just people selling and buying. Markets are only a reflection of investors emotions.
Buy on a rumor and sell on a fact. People afraid of losing their money start to sell on rumors. Fear of losing money makes the market prices go down. People become greedy and buy trying to catch a free ride. Fear of losing a good opportunity makes the market prices to rise up and up, creating a bubble.
As a forex trader, you learn technical analysis to help capture profits from a movement in the price. You should understand and learn how price action takes place by developing a forex trading system that is ruled based and does not depend on emotions to make decisions.
The best method to overcome emotions in trading is to develop a trading system that is ruled based and mechanical in nature. Trading is an art. There will always be 10% of discretionary judgment in each trade. Develop a trading system that has clear cut rules for entering and exiting a position. Use those rules consistently. There maybe a few losses as I have said there is always the chance of 10% going wrong. But with a good forex trading system, you can be sure the number of winner will be greater. - 23210
Good traders need to be emotionally detached in making trading decisions. Your trading decisions must be independent of fear and greed. One of the attributes of good traders is that they accept losing. They make decisions based on an intellectual level. Traders who get emotionally involved in trading make substantial errors. After a few losing trades, they try to whimsically change their strategies or after a few winning trades become carefree.
Good traders are emotionally balanced. In the midst of a losing streak, they try to take a break before fear or greed starts to dominate their strategy. You cannot win every trade; you must be psychologically strong enough to cope with losses. Even very successful traders go through stretches of losing trades but they are emotionally strong enough to cope with it.
If you are going through a bad stretch in your trading, take a few days off from watching the markets. Try to clear your mind. You should think of taking a break. It can breed greater losses and ruin your psychological confidence, if you keep on trading relentlessly during tough market conditions.
Make no mistake about it. No matter how much you study, practice and trade; there will be losing trades throughout your trading career. The key is to make them small enough in order to live to trade another day. You can overcome a lot of bad luck in your trading by using good money management rules.
You need to control your emotions in order to become a master trader. One constant is the human emotional behavior despite many new methods that have been introduced to traders. After all, markets are just people selling and buying. Markets are only a reflection of investors emotions.
Buy on a rumor and sell on a fact. People afraid of losing their money start to sell on rumors. Fear of losing money makes the market prices go down. People become greedy and buy trying to catch a free ride. Fear of losing a good opportunity makes the market prices to rise up and up, creating a bubble.
As a forex trader, you learn technical analysis to help capture profits from a movement in the price. You should understand and learn how price action takes place by developing a forex trading system that is ruled based and does not depend on emotions to make decisions.
The best method to overcome emotions in trading is to develop a trading system that is ruled based and mechanical in nature. Trading is an art. There will always be 10% of discretionary judgment in each trade. Develop a trading system that has clear cut rules for entering and exiting a position. Use those rules consistently. There maybe a few losses as I have said there is always the chance of 10% going wrong. But with a good forex trading system, you can be sure the number of winner will be greater. - 23210
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading and swing trading stocks and currencies. Trade Dow Futures. Learn Forex Trading.
posted by X - Men @ 12:04 PM
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