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The Psychology of Market Cycles

28 Dec

Market Cycle

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Stress and Instincts in Trading

14 Dec

PsychologyTrading Stress

Trading stress is stress that is caused by the act of trading. For example, the fear of losing money can place a trader under significant stress. Perversely, trading stress only compounds the original problem. For example, if a trader is having difficulty making a trade management decision, the stress that ensues will only make it harder to make the decision, and will almost guarantee that the decision is made badly.

The solution to trading stress is knowledge and experience. Knowledge gives a trader the ability to trade well, and experience gives a trader the confidence to trust in their knowledge. When a trader knows that they have the ability to be profitable, and they also have the confidence to believe in themselves, it is much easier to overcome any stressful situations that might arise. Continue reading

Patience and Discipline Psychology.

10 Dec

PsychologyAll humans (including new traders and professional traders alike) experience emotions (often whether they like it or not), and trading is one activity that can elicit many different emotions and rather strong emotionss (like many monetary activities). As a result, new traders and professional traders alike, should know that their emotions are going to affect their trading whether they like it or not. In response, professional traders either have or develop personalities that allow them to overcome their emotions and trade profitably. Two of the most important such personality traits are patience and discipline, because they allow a trader to handle one of the most difficult aspects of trading (i.e. waiting for their next trade). Continue reading

Emotions and The Holy Grail in Trading.(I)

9 Dec

Forex-Success-FormulaIt is widely believed by new traders, that there is a single trading system (i.e. a single set of trading rules), that is composed of a small group of technical analysis indicators (e.g. two stochastic lines and the MACD), with a certain configuration of technical indicator settings (e.g. twenty bar and thirty bar stochastic lines and a fifteen bar MACD), that can be traded on any market using any trading style (i.e. scalping, day trading, swing trading, or position trading) and always makes a profit. Many new traders spend years searching for the holy grail of trading, believing that it is the key to their being a consistently profitable trader. If you are one of the new traders that is (still) looking for the holy grail, today is your lucky day, because the holy grail of trading is revealed in the very next paragraph. Continue reading

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