Psychology

Psychology

Making “anger” trades after either having a bad loss or making a bad decision is known to every trader, a beginner and a pro. As soon as emotions get a grip of a trader, useless trades are almost inevitable. Anger and revenge trades are so fatal that can wipe out a forex trading account within minutes. How to identify what triggers trader to emotional trading and what is the way to get out of self-destruction pass immediately with a minimal losses? 

Emotional trades in forex happen often and whenever trader looses the control, the account gets wiped out fast.  Even with reliable trading strategy, strict discipline and good money management it is easy to become emotional after making bad choices, start increasing size to make it back, moving stops, averaging down, creating excuses to continue trading, look for opportunities that are not even there.

Read more: 8 Tips To Stop Anger and Revenge

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Overtrading is a familiar issue to all forex traders and is considered the most common pitfall. The compulsive, unanalyzed decisions to enter a trade and the disregard for the trading strategy often turn into an unpleasant and costly experience, therefore most forex traders try to select the very best trades and avoid overtrading at all cost.  

The most important thing is to distinguish between mindless overtrading and trading a lot but according to the strategy plan. There is nothing wrong with trading non-stop if it is a part of your successful system.  Overtrading, on the other hand, is triggered by greed, anger or revenge which is doomed in the long run. 

Read more: Danger of Overtrading - Reasons and Solutions

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Every forex trader should be aware of the psychological weaknesses accompanied with forex trading. Understanding of these weaknesses and good care of one’s psychological health are important parts of being successful. There are all kind of different human weaknesses, however do all psychological weaknesses cause traders to lose? Or are there some specific weaknesses that affect forex trading in particular? 

Humans have plenty of psychological weaknesses, however not all of them are lethal when it comes to forex trading. The basic trading weaknesses are: 

Read more: Trading Weaknesses: What Forex Traders Suffer From the Most?!

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I can’t stand losing! None of us really can! I don’t think there is a forex trader who sincerely doesn’t hate losing pips. Disappearance of so-much-wanted profits leads to hurt ego, frustration or an empty feeling of a wasted trading day. What are ways to fight the anxiety in forex trading? 

It is definitely annoying to look back at your trades, analyze the steps you made and find a better entry. It is frustrating to see the market go on without you after bailing out of trade! It is sad to be left with an empty feeling at the end of the day after making +1 pip (although, hey, that’s still a profit!!). It is outrageous to be at loss.

Read more: Confidence and Loop of Success

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The dilemma in forex trading is the uncertainty, since it is extremely difficult to predict for sure when the market is going to be overbought or oversold. The struggle between your mind and actions is endless. Sometimes you end up blowing up your account completely due to fear and hesitation. The question is, how can you force yourself to be more focused during trading and concentrate better while entering a trade? How to overcome the urge to close the trade too early and therefore end up with a small profit?

Forex trading isn’t easy and there are no guarantees in this game. The trick is to lean to play the odds in your favor and build up the trading experience.

Read more: Overcome the Lack of Confidence