Trading Psychology

Psychological preparation is very important when you want to reach good stable results. A beginner, who has just started the trading process, quite often considers Forex as something easy to learn, but this is not true. Having earned a small sum in the beginning, he loses his head and as a result, can lose absolutely everything.

During the first days of trading, you can start writing down all the actions made by you. In a little while, you might notice that there is not that much profit. You can start analysing your trading strategy and notice at once that it is not that bad, but then you draw your attention to the comments: "closed too early", "kept position open for too long", etc.

The reasons for such situations are unpreparedness and lack of confidence. Almost every trader who has made at least a dozen deals will agree that self-discipline, control over emotions and the ability to make adequate decisions are vitally important trading conditions.

Trader Psychology

There are too many nuances on the market, which cannot be predicted. If you knew everything, you would be a perfect trading machine. Because it is very important to understand that people are imperfect, it is necessary to cope with the psychological state that can only disturb.

It is much better to use energy, spent on unnecessary emotions on learning new strategies and enjoyable moments of life.

While trading on the Forex market, you stick to your own or borrowed strategy. You place the order, and then you see that everything does not go the way you planned. A majority starts to panic and close orders to reduce possible losses, thus changing trading strategy. However, as soon as the order is closed, you see that the graph moves in the desired direction, but the moment is lost.

This situation is an example of psychological instability. When tiny changes are not in your favour and you are ready to escape. Only three results are possible during the trading process: profit, loss or zero result. Of the three possible situations, only one brings positive emotions, whereas the other two are soaked with negative emotions. However, if you respond to every negative result with panic, annoyance and fear, very soon, there will be no energy for trading. You must learn to control yourself and your emotions and not consider every failure as the end. Trading should benefit not only money but also the joy of the process. It is much better to use energy, spent on unnecessary emotions on learning new strategies and enjoying moments of life.

Trading psychology

The Effect of Leverage

Leverage can play a low-down trick with traders. The effect of leverage allows you to trade larger amounts of money than you invest. However, leverage can either operate for your side or against you. Some traders choose a big size of leverage to work with more significant sums. It creates the illusion of "unlimited opportunities without any risk", but it is not always like that.

A big volume of traded funds may bring great profit because of the leverage, but never forget that along with income, there is a big possibility to lose almost all deposits. Experienced traders advise to carefully analyse and choose the size of the leverage that will help you avoid a high level of risk.

It is possible to indicate three main phenomena of the work on the market: greed, hope and fear. Each trader has his reaction on every emotion previously mentioned, but these emotions have one thing in common – in excess, they do not let you make correct decisions. Greed must be moderate, hope – justified and fear should motivate. Only under these conditions, the emotions would not harm; they will help.

Greed, hope, fear

How to Reduce Trading Stress?

Stress is the main newbie's enemy. People act differently when in a stressful situation. Someone gives up and does not want to fix anything, whereas someone decisively saves the situation. Trading on the Forex market is second, after sapper, most stressful profession in the world. However, if you know the core of the problem, you can solve it. It is extremely important to study stress management skills. The sources of stress can be different: from loss of several pips to the attitude of your spouse towards your work. External factors will always follow you, but you can change your attitude toward them. The biggest enemy you struggle with is you.

Trading psychology is a very important discipline, which must be studied by every trader, who counts on long-term work on the currency market.

While working on the Forex market, you need confidence, concentration, practice and persistence. After all, not absolutely everything depends on trading systems and chosen strategies. It is quite hard to work and overcome difficulties by yourself, but it will help you in trading, and it will become one of the main factors of success. Trading psychology is a very important discipline, which must be studied by every trader, who counts on long-term work on the currency market.

It is very important to study stress management skills so that when you open a live account, nothing will separate you from the profit.

by JustMarkets, 2016.10.24

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