Emotions are one of the factors that influence traders’ decision in the forex market. It is therefore critical for traders to know the type of emotions they could expect and how to deal with them to ensure that they don’t interfere with the traders trading decision.
How well you can manage your emotions as a forex trader would determine your level of profit or loss.
What this means is that you don’t only contend with other traders in the forex market, you as well have yourself as one of your most significant success limiting factors.
Apart from our human ego to survive, we as well have instincts and emotions that can unite together to help make us successful now and then. On the contrary, instead of helping us to succeed, our feelings join together to cause our woes except we work hard to put them under control.
Some traders wish that it would be possible to remove entirely any form of emotion from a trade, but this is not at all possible because some emotions are helpful. They may help you to boost your trading outcome.
Your best bet is to try to understand yourself well as a trader, discover what strengths and weaknesses you have and choose a trading style that is suitable for your personality.
The SEVEN most common emotions in trading
Overtrading in Forex
Majorities of day traders suffer from overtrading and design strategies to overcome the urge to overtrade. Developing a management strategy that keeps you from overtrading helps you to remain in the market for a long time and maintains your sustainability. Both novice and professional traders suffer from overtrading emotion.
Fear is one of the two most common emotions experienced by forex traders. The emotion of fear is manifested many ways and can make you make many trading mistakes.
The fear of losing makes it difficult for traders to discover loss on time and this result to additional losses. This can cause a trader afraid of losing back the profits he has made, and this can make them close winning trades too soon. There are a lot of other effects that fear can cause to your trading.
Do not be over greedy to make too much gain. Greed ought to work to your favor but in reality, it doesn’t it makes you make too many spontaneous and reckless trading decisions which you would have easily avoided if you work on your greed.
If you are influenced by greed, you will find it difficult to keep to good risk and money management practices.
Greed as well boosts your gambling attitude which makes you trade without pre-planned rules and impassively.
Hope, fear, and greed frequently work together. When you place a losing trade, you may show signs of hope by failing to recognize the loss early and allow the market to move further. You can also show signs of hope when you work to compensate previous losses by entering a trade with a massive position outside your trading rules.
Excitement and anxiety
When you are incredibly anxious during trade, it is frequently a sign that you entered too prominent a position and are working against your trade rules or when you opened a trade that you shouldn’t be in regularly.
Recording your feelings and trying to discover why you are anxious or excited can assist you to exit trades that you ought not to enter in the first instance.
A feeling of monotony
You will frequently lack the ability to focus when you are bored. You will discover when you are bored if you find out that you go over the same tools and time-frames repeatedly without proper knowledge of why you are doing so. Your boredom can also make you miss to enter trades at the right time because you are less concentrated.
Another emotion you can experience is frustration. This could frequently occur due to a trading mistake caused by any of the other forms of trade emotions experienced by traders. When you miss trades, trade against your trading rules and too much risk that cost you too much money, you may suffer from the emotion of frustration. Frustration makes worst your problems.
You need to develop strategies to properly manage your emotions to ensure your success in the forex market.
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