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The Psychology of Trading

by on December 11, 2018 in Latest News, Lead Article, News you can use, Nuggets

The Psychology of Trading

It can seem so easy to learn the trading process and rules, create your own trading strategy and then begin placing orders.

The expectation is, of course, that you are going to see lots of good trades (due to your carefully-honed skill, of course) and you’ll soon be rolling in dough. It stands to reason that if you do your homework and follow the rules that you will win. But unfortunately, the market can play tricks on even the most experienced trader.

As a newbie, you can get extremely frustrated early on, but by understanding how the market works, you can adjust your expectations. Instead of focusing on money and winning, spend the adequate amount of time studying, watching and learning from your own trades as well as others.

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Understand Your Fears

Trading forex can be a volatile market, and no one expects to win with every deal they enter. However, you also can’t go into shock every time you see the market going in a direction that was not predicted or did not fit into your charts. Deal with this emotion ahead of time by understanding it. Take the possibility of losing from the beginning, when you enter a trade. Be conservative with how much you are investing and make sure it’s a percentage that you can lose without depleting your trading account.

If you are only risking 1% on a trade, then there is no reason to panic when you don’t win. Take a loss into stride as part of the big picture.

Don’t Over Analyze the Results

You are probably subscribed to some of the best forex traders and have spent oodles and gobs of hours going over your own trading strategy. But you know what? You can still lose in forex. Even though you’ve been to the most important seminars, participated in top quality workshops and read dozens of books, that will not put some sort of a magical ring around you protecting your trades from losing.

No matter what you’ve done and how you’ve prepared, you will experience losses. Instead of panicking or getting depressed, keep on trading. Don’t stop after each and every loss to analyze what might have gone wrong or how you could have avoided it. It happens. Period. Get up and go on. After several trades, then go over your trading journal to check if the mistake was yours, if it was a random market plunge or if your trading plan needs to be adjusted. But don’t stop trading!

Accept Responsibility for Your Results

Many things can go wrong with a trade, and you cannot always know ahead of time. If you could predict the market, everyone would be a winner! But instead, do what you can to improve your trading results. Make sure your computer and internet are up to snuff, so you don’t blame losses on your equipment.

Do some analysis to confirm that you are trading in the best markets for you. With forex, you have a 24/7 option. If you prefer trading in the wee hours, choose a market that fits your preferences. The bottom line is to find what works for you and go for it!

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