In this article we will discuss the psychology of trading on Forex market. Regardless of trading experience all traders must know one of the main principle of successful Forex trading: give your trade a chance to bring you profits.
This principle is easy to understand from the theoretical point of view, but practically it can be very difficult to apply.
In the first case, you need to have a lot of patience not to close a profitable trade too early. And it is very important to know how to control yourself if you wish to stay in the market for a long time. If you don’t have patience, you can close a trade too early with a small profit but the other day you may have big losses and it will diminish your little profit.
In order to avoid it, try to apply the principle of profit growth. To accustom yourself to this principle, we can recommend you to imagine a failed trade in your mind. When you start to ‘scratch your hands’ and want to close a trade early, immediately imagine a bad scenario of this trade. This is an effective technique. When a person imagines something wrong, he instinctively doesn’t want this to happen. It will help you in your trading, but be careful not to believe in the bad trading scenario that you imagine. Otherwise, each time you imagine something bad, you risk to make it happen. Stay calm, because being nervous leads to an unsuccessful trading.
We would like to share with you our observations of trading in Forex market. They are directly related to psychology, but this time not of the market, but of a trader. Singapore Forex as well as Forex in any other part of the world is booming and more new traders join this global market on a daily basis.
If a trader performed a profitable trade or just started trading on that day, he could easily fulfill the principle that we talked about above. However, if a trader gets a loss earlier that day and then opens a next trading position, he is no longer able to follow the trading principle. And it’s all due to human psychology. Having a loss, a trader begins to be very cautious. At the slightest suspicion of a rollback, a trader closes his trade in order to cover his losses.
In other words, after some losses in trading a defense mechanism of a trader opens up. And instead of making correct actions, he is making mistakes. After loosing a trader tries to win the lost back. Although the best way out would be to apply a little more patience and close a trading position not at the moment of covering the losses, but when the trading position brings profits. Thus you not only recover the losses, but also get a small profit. Once again we are convinced that psychology plays a great role in Forex trading. Its understanding will allow you to dramatically improve your trading results.
Source: Forexarticlecollection.com
This principle is easy to understand from the theoretical point of view, but practically it can be very difficult to apply.
In the first case, you need to have a lot of patience not to close a profitable trade too early. And it is very important to know how to control yourself if you wish to stay in the market for a long time. If you don’t have patience, you can close a trade too early with a small profit but the other day you may have big losses and it will diminish your little profit.
In order to avoid it, try to apply the principle of profit growth. To accustom yourself to this principle, we can recommend you to imagine a failed trade in your mind. When you start to ‘scratch your hands’ and want to close a trade early, immediately imagine a bad scenario of this trade. This is an effective technique. When a person imagines something wrong, he instinctively doesn’t want this to happen. It will help you in your trading, but be careful not to believe in the bad trading scenario that you imagine. Otherwise, each time you imagine something bad, you risk to make it happen. Stay calm, because being nervous leads to an unsuccessful trading.
We would like to share with you our observations of trading in Forex market. They are directly related to psychology, but this time not of the market, but of a trader. Singapore Forex as well as Forex in any other part of the world is booming and more new traders join this global market on a daily basis.
If a trader performed a profitable trade or just started trading on that day, he could easily fulfill the principle that we talked about above. However, if a trader gets a loss earlier that day and then opens a next trading position, he is no longer able to follow the trading principle. And it’s all due to human psychology. Having a loss, a trader begins to be very cautious. At the slightest suspicion of a rollback, a trader closes his trade in order to cover his losses.
In other words, after some losses in trading a defense mechanism of a trader opens up. And instead of making correct actions, he is making mistakes. After loosing a trader tries to win the lost back. Although the best way out would be to apply a little more patience and close a trading position not at the moment of covering the losses, but when the trading position brings profits. Thus you not only recover the losses, but also get a small profit. Once again we are convinced that psychology plays a great role in Forex trading. Its understanding will allow you to dramatically improve your trading results.
Source: Forexarticlecollection.com
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