Ten mistakes psychological affect Forex Trading.
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It is said that the personal psychological challenge is 90% of the fight to achieve a consistent success as a forex trader. Can it be true?
Yes and no. Many large traders who have written about their experiences have spoken of how their own struggles internal psychological have caused them losses, even when they “knew” that whatever they were doing was wrong. There can be no doubt that psychological factors are of great importance in the game of Forex or to speculate in any market.
Mastering the psychology of negotiation will not offer money for itself, but if you are not aware of the tricks that your own mind is trying to play, it is likely to be lost even if you are a good trader and been successful in your trading decisions. There are hundreds of ways by which a trader can sabotage himself. There is a “physical” aspect to the negotiation.
We hope to serve you help in your journey as a trader be aware several psychological traps that fall traders normally. Sometimes just need to experience something for yourself to learn from it: nothing teaches better than direct experience. We hope that some of these points provide a new understanding of the errors of trading that has already committed or to warn in advance of errors that he has still not committed. Try not to blame himself when he makes a mistake when operating: get your “revenge” learning the lesson and not making the same mistake.
Common psychological Trading errors-Forex Trading
Not believing in its methodology
It is surprising the number of people that operates in markets without being convinced that can earn money or at least make sure that you have a good chance of doing so. Even if you think that you believe in what you are doing, are you certain that doesn’t have great doubts under the surface? The answer to this problem is to test its methodology. For example, if you follow trends, take a time to do a review on a large amount of historical data. Shows good results most of the time? Is based on a solid concept, as a reversion to the mean or impulse? If the answer to these questions is Yes, you must believe in what you are doing and do not forget that you believe in it.
Not having a Plan and adjusted to the
This sounds pretty obvious. It is not just a matter of having a plan, is to have several plans and leave some flexibility. For example, if you are doing day trading, it must have a method to decide every day what currency pair or pairs will negotiate. However, if the couple who choose not going nowhere, while another pair is triggered, might want to reconsider your decision rather than just “go with the plan”, for example, allowing the option to change your mind every 1 hour. It’s a ‘plan’, but a plan can also include structured flexibility.
Not to appreciate the difference between plan something and living it
It is quite easy to make a plan that works on paper, but living that plan in real time can be something completely different. A good example is to make a plan to make hundreds of operations more or less in a year and expect your account to suffer a reduction of 20% as it suffers a streak of 20 consecutive losses operations. You can do the review in a day or two and decide if such losses are acceptable. You will probably feel very different when you spend weeks or even months losing real money again and again while watching shrink your balance. There is a good response to this dilemma, just keep in mind that spend months at a time more or less is not necessarily a good psychological practice for the bad moments of negotiation.
Be afraid to place a position or be very avid
These are opposite sides of the same problem. The best way to overcome this is tell yourself every day that you are willing to drop several positions in a day or none at all, and that what you do will depend on out of the situation of the market rather than the condition of your wallet or your mood. There will be days without action and with lots of action. It must be adapted to the circumstances.
Make “Arrangements” with the market
Said to himself that, if the price goes up other 10 pips or that if it does not rise in the next hour, you will close the position. This is simply your mind to their anxiety. Ignore this, stand firm, and just leave the positions according to your plan.
Avid take profits
You see a profit on the table and think of how nice that would be taking it and cease to operate that day, thus losing what could be a more profitable day. This is laziness and self indulgence and it must be controlled. The only reason to take profits should be that you have a real reason to believe that probably it won’t go much furtherin the desired direction. Let the market signals are, not to anticipate it.
Protect yourself from losses very soon
This is really the same as greed for profit taking. It may be that you need to reconsider your risk management strategy.
Let the positions with losses
There is a simple way to avoid this: always use a strict stop-loss and not expand it constantly.
Not be responsible for your Trading
It’s easy to make excuses. If I had not lost the distracted State/bus / cranky then it had mishandled the position better and you would have earned money rather than lose it. It is your responsibility to make sure that you don’t miss the bus or get distracted or is in a bad mood. Once you assume responsibility for your trading activity, mood can improve as you see there is a way to make things better. It is a marathon, not a sprint. Forex Trading.
Endless pursuit of the “Holy Grail”
You make some tests and design a strategy that gives you an average of 20% of profits for the year. But wait! Otherwise, try to win even more, say 25%. Is there anything better out there? Perhaps, but this search and test process can take a long time. Consider this: If you spend six months doing tests instead of operating in a committed manner to find a way of gaining 25% instead of 20%, you will simply lose 10% andwill take you one year to compensate. Follow seeking by all means, but don’t let that affect your trading. Although you have a pretty solid methodology, it need not beperfect!.– Forex Trading.