Forex trading psychology is a big thing to be a successful trader. Also, the big thing is it is often not a lack of academic understanding that is trading mistakes as the primary originator. Only vast knowledge in market analysis is not a fact to determine the success of a forex trader.
You know everything about the indicator and a 100 of strategy but if you don’t know about some important things you will fall down.
Forex trading psychology is the skill of managing your own emotion. There are many intelligent traders but they still a loss on forex. Because they can’t control emotions, their emotions work as greed and after making a profit they fall into mind trap.
When the intelligent trader or you don’t know how to manage the emotions it will damage your trading fund. The answer is simple if you cannot take the right decision when you are too happy, angry, or frustrated.
Experts think there are four main psychological obstacles to successful trading:
Here you have to look at how expert traders manage their emotions:
There are many experts and successful traders who are good and they manage their emotions carefully, you can say well. They don’t follow their emotional commands. They actually follow their own strategy when opening trade or close a trade.
The bellow we made a shortlists for you to make a better trade.
Experts don’t trade out of greed
Experts and successful traders obviously avoid many things that can bring out their emotions to take for the wrong decision.
It’s not better placing a trade and loss fund? Right? Experts follow this strategy to handle emotions.
Your greed can be your enemy if you cannot handle it. The main psychology of forex trading is you have to control your greed.
Never expert quick trade
Quick profit is also a type of greed. When a common man wants to start forex trading or a newcomer wants some motivations it comes often comes they heard forex trading is the way to make a quick profit.
Yes, forex trading is the easiest and quick way to make a profit. But there is a lot of things in the back-end.
How traders make a quick profit? If you want to make a profit you have to be a successful trader. Expert traders open a trade with huge volume and lot sizes when they want to makes a quick profit.
But novice or intermediate traders cannot open a trade with a big lot size. Open a trade with a big lot size is also a big risk of the trading funds.
When newbie traders fall into greed and they open a trade with a big lot size. The story is time to finish now! They lost their fund and speak its gambling. Professional traders never do this. Professional traders always follow a good risk management strategy. It is big psychology of trading.
Mindset is very important for traders. Experienced traders are always aware of the uncertainty in trading. You cannot open a trade with 100% confidence. Forex is the volatility market, no matter how good your trading strategy your imagination, and your decision.
You have to clear and strong mindset that the forex market can go against predictions at any time. So you have to strong, you won’t get a shock after losing a trade.
So preparation is a certain way to reduce the impact of emotion. Now start to always prepare for the loss.
So now the question is how can you manage your psychology and make a successful trade?
We know “Prevention is better than cure”. So we made short tips for you, check below.
Good trading plan: Trading planning reduces the negative impact of prevent emotions and helps to make a successful trade.
Expert traders always follow a well trading plan. So you have to make your own trading plan and develop a solid trading strategy.
Avoid overthinking: All newbie start watching currency movements after opening a trade. Better avoid it to avoid stress, just use the stop loss. After opening a trade just go out to walk for a while.
Proven strategy: Don’t forget to use the perfect strategy. Always use your proven strategy. A proven strategy also reduces loss risks and increase winning chances.
Break: Human needs rest in everywhere to re-burn. It is better to take a break after winning or losing trade. In this break you can analysis, check the market read some important things, and more.
The solution of psychology
Emotions “During the 1970s, psychologist Paul Eckman identified six basic emotions that he suggested were universally experienced in all human cultures.” (verywellmind.com)
Managing emotions is the main key to long term success. But if you don’t know how to manage, you have to learn a lot of lessons. In the forex trading more than 90% trader loss their trading fund and more than 80% quite forever. So you have to think now about what you will do. The psychology is the big reason for this to happen.
If anyone taking more risk from his / her should then it is greed, which is an emotion. Also, they start live trading without practicing demo trading it is also greed.
So if you have got the mastery of controlling emotions you got the trading psychology. You can buildup yourself a professional trader now, just keep it up.