Common Psychological Trends FOREX Trader Must Not Follow

Common Psychological Trends FOREX Trader Must Not Follow

Submitted by adil on Fri, 07/18/2014 - 17:53

How Does A Solid Mindset Affect Trading?

Does specific psychological traits really affect FOREX trading? Or, is it just a hoax marketed by brokers so the trader blames himself for the losses instead of paying attention to the market manipulation done by trade firms?

The answer:

YES. The psychology of a FOREX trader affect his ability to make profits, but it is not the only factor that has profound effect on his trading abilities. If a trader is experiencing bad days at FOREX trading, he needs to look far beyond his mental state to pin-point the cause.

After careful analysis, if the trader still thinks there is no technical or strategic problem with his trading, then following points may help him:

Common psychological trends that hurt a trader:

• I am being manipulated: This is the reason many traders quit FOREX trading. Many news forums feed stories of brokers manipulating data and cheating the traders. Many traders waste time just to find if they are being manipulated instead of concentrating on trades.
• Lack of belief: When a trader starts losing capital or is not making profits as planned, his belief in the trading system starts to dwindle. If the trader also feels being cheated, he starts to lose interest and wants a way out even without performing analysis.
• Burning through trades: Too much trading is as dangerous as making trades without concentration. Using short-term strategies without discipline can lead to disasters, it may bring short-term profits but in the long run you may be spending more than earning.
• Fear of trading: There are many risks involved in FOREX trading. Even the most successful traders experience loss. The fear of losing capital can get into the heads of new traders as they think there is some other opportunity which provides profit without any risk.
• Drawn towards impossibilities: FOREX trading is a definite system where different stakeholders work together to a sustainable market. Therefore, no matter what websites market, the profits and money making opportunities have an upper cap.

Solution to the above problems:

It can be difficult to revert the confidence of a trader, but it is never impossible.

• Incidents regarding manipulative brokers maybe true, but such events should not affect a trader’s focus. If trader is sure of being cheated, gather all proofs and launch an inquiry in government regulatory departments. Most of the broker firms are regulated, stay away from the unregulated ones.
• You are in, or you are out. Don’t be hanging around with a confused mind. Start believing if you want to enjoy some profits.
• At least once a week, take a break and look at the bigger picture. Analyze if your short-term strategy is going in the right direction for long-term profits.
• You will lose some money in FOREX trading. This is where strategies come into play. Sustain your business and build your capital with a gradual approach. Do not flinch when making a trade which analysis says is good.
• Be realistic. Keep facts in your mind when planning your trades. You can be successful by being arrogant, but not by being ignorant.

FOREX trading is best when you have a clear mind. So if something is bothering you, a change of scenery might help. Trade fresh, trade FOREX.