Sunday, January 20, 2013

Psychology of Forex Trading - Helping Yourself React Better When Trading

Based on everything I've learned from being a part of the Market Traders and what I've seen around the forums with regards to member discussions and reactions to certain areas of trading, I thought it'd be helpful to post this for you all, in hopes to help you curb that emotional stress that may cloud your trading abilities from time to time.

A high percentage of trading is based on HOW you trade. It's based on your emotional control and your thought processes. It's a natural reaction to give in to emotions or stresses from time to time, but when it comes to trading, you have to control that. It's crucial to your trading success.

If you place a trade and it doesn't work out the way you had hoped, natural reaction is to get frustrated or nervous and maybe even immediately try to recoup or recover that bad trade in hopes of making a good one that overcomes the bad one. Best advice is to trade as though this is your first trade, every time. You MUST control your emotions when trading. Only trade based on logic and facts, use the skills and teachings you have received. If you haven't received the teachings yet.
A non-emotionally based trade is less likely to lead you to huge loss after huge loss. Especially when you are taking your education to heart and applying what you have learned to your trades. More often than not, you will have a better grasp and control over where to place your trades, if you are applying what you have learned from a Forex expert(s).

If a trader is having a bad day or feeling upset about anything in particular, this probably isn't the best time to place trades. That's where a lot of people make their trading errors, because they think they can just "block what's bothering them out of their mind" but it is much easier said than done. So try to do yourself a favor and not trade during these emotional times. They happen to the best of us from time to time - after all, such is life.

I truly hope that this post helps you and that you can re-read it as a reminder during the times where you may feel that you are about to trade based on emotion and are having a hard time overcoming that.

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