It is said that forex traders lose mainly because of their emotions. If you ask about the emotions that are the cause of forex traders losses, you hear the two words, fear and greed, more than any other word. When you try and lose, you may ask yourself what your problem is? Are you losing because of your fear, or it is your greed that makes you lose? Or you lose because of not having enough knowledge and experience in forex trading?
Most traders think that they lose because they have not learned enough, or the trading system, indicators or EAs they use, are not good enough. Therefore, they look for other trading systems, indicators and… and they spend a lot of time and money to try a new system every week or month. But they still lose. They lose with the same trading systems that make money for some other traders. So the problem should be somewhere else.
In fact, professional and experienced traders use very simple systems. Price chart is the only thing that most of them use, and many of them have no more than one indicator on their charts. The more experienced they became, the less number of indicators they used.
You start learning and trading forex to make money. Everybody likes to make money. Everybody HAS TO make money. It is normal to have such a desire, because we need money to survive. If not, now you had not been reading this article. You are here, because you like to make money through forex trading. Yes, you can make money through forex trading, but the tendency of making money which is necessary to start and continue, will become a problem, if not controlled. You lose more, just because you like to make more. This is something that we know as greed.
Novice traders have no fear at the beginning. Usually fear comes after a period of losing. When fear takes the control, your losses will come to your mind whenever you want to take a position. Before, you were thinking about the money that you could make. Now that fear has taken the control, you always think that you will lose again if you take another position. If you enter the market and your position goes to profit, you get out too early just because you want to get out as a winner this time. If the market goes against your position, you either get out too early because you do not want to have another big loss, or you remove the stop loss and prefer to wait until the market turns around and you get out at breakeven or at least with a small profit. You do not want to be a loser anymore.
Usually fear makes more problems for the traders. While a controlled level of greed is motivator, having fear even at the slightest possible level can cause the traders to make more mistakes or stay away from the market completely and miss the opportunities. Fear can ruin everything, both in trading and life.
Fear and discipline should not be mixed up with each other. Something that makes you wait for a strong and confirmed trade setup, and prevents you from taking a position before forming a trade setup, is called discipline. Something that makes you miss the opportunities, and prevents you from taking positions even when good trade setups are formed is fear. It makes you just sit and watch the market and take no action. The more you listen to it, the stronger it becomes. And maybe it is fear that finally makes the traders to give up and think it is impossible to make any money through forex trading.
All novice traders may experience fear and greed from time to time. A few winning positions makes them over-confident and too greedy. And a few losing positions makes them lose their confidence and stay away from the market. This cycle can be repeated several times, until you finally give up, or become able to come to the balance and control your emotions. The point is you should be aware of your situation. If you feel over-confident, you should analyze yourself and find the reason. If you are fearful, you should be able to balance yourself before losing your interest and missing the opportunities.
It takes time. You should start and keep going.
Source: Forexoma.com
Most traders think that they lose because they have not learned enough, or the trading system, indicators or EAs they use, are not good enough. Therefore, they look for other trading systems, indicators and… and they spend a lot of time and money to try a new system every week or month. But they still lose. They lose with the same trading systems that make money for some other traders. So the problem should be somewhere else.
In fact, professional and experienced traders use very simple systems. Price chart is the only thing that most of them use, and many of them have no more than one indicator on their charts. The more experienced they became, the less number of indicators they used.
You start learning and trading forex to make money. Everybody likes to make money. Everybody HAS TO make money. It is normal to have such a desire, because we need money to survive. If not, now you had not been reading this article. You are here, because you like to make money through forex trading. Yes, you can make money through forex trading, but the tendency of making money which is necessary to start and continue, will become a problem, if not controlled. You lose more, just because you like to make more. This is something that we know as greed.
Novice traders have no fear at the beginning. Usually fear comes after a period of losing. When fear takes the control, your losses will come to your mind whenever you want to take a position. Before, you were thinking about the money that you could make. Now that fear has taken the control, you always think that you will lose again if you take another position. If you enter the market and your position goes to profit, you get out too early just because you want to get out as a winner this time. If the market goes against your position, you either get out too early because you do not want to have another big loss, or you remove the stop loss and prefer to wait until the market turns around and you get out at breakeven or at least with a small profit. You do not want to be a loser anymore.
Usually fear makes more problems for the traders. While a controlled level of greed is motivator, having fear even at the slightest possible level can cause the traders to make more mistakes or stay away from the market completely and miss the opportunities. Fear can ruin everything, both in trading and life.
Fear and discipline should not be mixed up with each other. Something that makes you wait for a strong and confirmed trade setup, and prevents you from taking a position before forming a trade setup, is called discipline. Something that makes you miss the opportunities, and prevents you from taking positions even when good trade setups are formed is fear. It makes you just sit and watch the market and take no action. The more you listen to it, the stronger it becomes. And maybe it is fear that finally makes the traders to give up and think it is impossible to make any money through forex trading.
All novice traders may experience fear and greed from time to time. A few winning positions makes them over-confident and too greedy. And a few losing positions makes them lose their confidence and stay away from the market. This cycle can be repeated several times, until you finally give up, or become able to come to the balance and control your emotions. The point is you should be aware of your situation. If you feel over-confident, you should analyze yourself and find the reason. If you are fearful, you should be able to balance yourself before losing your interest and missing the opportunities.
It takes time. You should start and keep going.
Source: Forexoma.com
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