In the world of commercialism and among every noted market, like Forex or the stock exchange, you’ll notice that there are many things that every trader should take into consideration and should study so as to become a professional with the right amount of experience and knowledge.
This type of data required ranges from the definition of the market to figure itself, operation of the various platforms used competition, economy, and adequate quantity of capital to speculate and, above all, what kind of market can you select to begin. But there it’s a really necessary facet that almost all traders typically ignore as a result of the taking for granted; the trading psychology.
It is necessary to know that the success of any style of business or investment can invariably rely upon the thoughts of the trader and in fact on the approach within which we tend to handle a scenario or execute every of our thoughts, therefore, psychology is principal within the business world and everything that has to do with the Forex market.
Is the trading psychology important?
The trading psychology is undoubtedly the most important discipline that must be handled and studied by someone that wants to start in any kind of market, and in this case in the Forex market.
.In the world of Forex, psychology becomes one of the most important things once you started. The thing is that this type of investment is really attractive for many people around the world due to its easy way of handling the operations and comfortable platforms to use. However, the use of psychology becomes a main step to manage if the trader really wants to make it right in all the ways.
Let`s start from the beginning
To introduce you to this subject it is necessary to know that the self-confidence and emotional control are the fundamental pillars that are responsible for operating the psychology of trading and of course, your emotions manage, remember than this is supposed to lead you to the success you are looking for.
Below you will be able to see some things about the trading psychology that will help you understand yourself and the way you operate in a better way.
Enemies to your mind
We need to give every element in the Forex psychology, a name, this is an important part because due to it you will be able to identify everything since is easier for you to see it.
Let`s proceed to talk about certain elements that we will call enemies of the mind. The best way to define these enemies of the mind is seeing them as simple emotions that give a negative result or effect on the trader’s mind and that is the reason why we call them enemies.
In order to be able to defeat them and to face them as what they are, you must know them really well so that you will be in the position to identify them.
- Fear: This is the first enemy and the one that is probably the most known.
A good way to picture the fear is defining it as a disagreeable sensation accompanied and loaded with anxiety or worry that is weighed in the person due to the presence or anticipation of the danger that may come in a future.
If you are a trader and you are operating, this feeling comes often; it is one of the most common enemies of the mind and the trader has the duty to face it. Even if you are an experienced trader this is something that can happen to you, but it is true that usually the fear attacks the beginners. Even if it is a normal feeling, many times it can get out of control and it can affect any strategy the trader has.
As we previously said, Fear can also appear in experienced traders, especially once they get some of losing operations, which lead them to feel overcome by worry. The vital question is, there is a way to wear down it? This could be accurately answered; primarily, the simplest thanks to wear down fear is to maneuver removed from things wherever you risk more cash than you have got out there, since with caution, fear disappears.
- Euphoria: Normally the euphoria is seen as a good thing because it is supposed to move you forward and to encourage you to make decisions.
And even if that is true, the Euphoria can also be a real bad emotion that could throw away all the things that you achieved.
Euphoria is dangerous especially if you are a beginner trader, simply because it can get out of hand and in cases like that you will find yourself as a trader with an attitude of overconfidence and you can make decisions that will bring you regrets in the immediate future. The moment when Euphoria can take control of a situation is pretty simple to identify, and it is when the trader gains some operations.
Then, statistically, the greatest commercial losses occur after a couple of quite lucrative victories.
To be able to understand this in a better way and to face the Euphoria as it is a good way to handle it is to target what you’re doing, and understanding that the fact the you had one great move doesn`t means that is going to happen right after.
Also, you must have a set amount of money that will lead you through the amounts you must use in any case, that way you won`t lose your capital or even the money you just earned.
- Panic: In the next candidate to ruin your strategy and operations we present you to: Panic!
Of all the feelings, this is one of the most curious enemies, it is usually defined as a unexpected feeling that comes loaded with fear in extreme amounts, it is overwhelming, uncontrollable and paralyzing, it is probably one of the worst because there is a chance that you can`t get out of a state of panic for a while.
Some people compare it with fear, but that is a mistake due to the fact that with fear you still can do anything you want but you won`t be so sure about it and you will probably make some mistakes. But in the case of panic there is no chance for you to do anything for a certain period of time.
You as a trader must be always alert and active, not only to monitor your business, but to break through it. This enemy comes every time closer to the trader and it approaches silently in different situations, usually in apprentice traders, in the middle of situations where there is a lot of pressure, or when the trader is witness of different stories about how other people are having or had significant losses in the market. Another case when that can occur is in periods of market volatility.
If we put all of the feelings in a balance, this is probable the worst because a panic trader will make many mistakes and that means that in the middle of panic it will be unable to perform a logical analysis of the situation in which it is, also there is no way that something that comes out of a panic attack turns out in the right way. To be honest, there is not a specific way or infallible advice to avoid the appearance of this feeling, usually the possibility that this type of situation occurs, decrease once the trader starts to acquire more knowledge and gets experience. But something important is not to believe everything that is heard or read about other people’s experiences and remember that everything is about probabilities. The psychology trading will do the work for you once you can identify your enemies, because that will means that you are ready to control them.
Now, how can I manage my emotions or fight these enemies?
Well, now we will give you some Advice to be better in trading psychology
- Do the best you can to find the right trading strategy for you and stick to it. Having the right strategy will help you to accomplish your success even if there are some emotions playing hard to get rid of them.
- Manage your risk, this is one of the best advices you can get by any trader or any article you read.
- Know yourself, you will understand this in the moment that you start to pay attention to your emotions and everything that surround it, in this case, what causes them.
- To be organized can be a little bit difficult in any job that you have, but in this case it is truly important.
You should, for example start keeping a diary where you can track your progress and thus study the correct and incorrect movements made by you, this way you won’t be surprised by some results that could be a product of your disorganized methods.
In that diary you should also write what kind of situations have made you feel uncomfortable or have lead you to experience a bad time with some of the emotions we explained earlier.
You must know that anything is just how the people say it is and even our advices cannot be exact, but the truth is that to be cautious is the best thing you can do in any aspect of your life.
Having a logical method at hand to trade with a minimum margin of error is probably the start to take care of yourself and your money. Remember you are a human and you can`t be perfect…but can get close to perfection!