Forex Trading Psychology is the first thing you must learn about it, if you have been a trader then you must have sometimes felt that you fail and you fail even after doing good research and using the combination of Divergence Indicators with other indicators to get good profit earning signals. So the most important point here is to understand the exact reason working behind your failure.
How will you find that exact reason? Analyze the situation and analyze the way you trade, you will find that most of the times you are yourself responsible for your failure. Who has been your enemy here? The answer is you yourself. The experts also agree that Forex Trading is only 25% methodological and the rest 75% is the responsibility of your own psychology.
Forex Trading Psychology
So if you are failing continuously then it means your own psychology is your biggest enemy. In such a situation, it doesn’t matter the number of books you read, the knowledge you have and the resources you possess but you will fail in most of your trades. The reason behind your failure is your own polluted psychology. What pollutes your psychology is the next question? The answer is simple and in two words and that are greed and fear. Yes, greed and fear are the two prominent human emotions that are responsible for the failure of most of the traders. So if you can control these two emotions then you will become the winner otherwise if these emotions are able to conquer you then you will always be the looser. If you want to be a successful Forex trader then first learn to conquer these two emotions.
The Forex market is a global market where thousands of experienced and novice Forex traders trade everyday. Depending on the same Forex news , same forecasting technique and following the same rules and procedure, some traders are able to earn double or triple of their investment and some are finding difficult to survive even. Majority of the Forex traders stand in the line of losers whereas only few are able to gain profit. All the beginners make mistakes. There has been no trader in the Forex history that has not made a mistake or not incurred a loss. So mistakes are common for everyone because traders learn from their mistakes and in turn they pay for this learning in form of loss. The key to winning a Forex trade for the traders and investors is to first win against their own Forex trading psychology and then start trading.
There are five simple principles that make the Forex traders and investors perfect enough to clear all the obstruction in the way of becoming a millionaire. Following these principles will help you to earn profit than losing. These important principles are explained below.
Best Forex Trading Psychology Advice
Do not trade without a plan
The most important principle says not to trade without a plan. A good and profit earning trader is one who has a feasible plan to operate. The traders and investors should make this plan after careful researching and examining the currencies with stop and limit levels. A problem exists with the majority of the Forex traders that if they are able to earn profit in their first few trades then they get excited and forget all the principles. This should be avoided and the traders and investors can do this by winning their own psychology and trade only according to the plan developed.
Place Stop Loss
The second important principle says to place stop loss on every trade. So if your position starts going negative then also you will be able to exit timely by cutting your losses. Majority of the Forex traders and investors face a problem that their losses can again turn to profit after waiting for sometime but if this does not happen then it is possible that they may lose all their money in just one trade. So the traders and investors should win this psychology and never place an order without stop loss.
Do not let your emotions to rule on you
The third important principle says that keep your emotions in your back pocket while trading. Do not love your trades, cash them if you are earning the profit predicted. Majority of the beginners if they win their initial trades start feeling that their luck is taking the prices higher. Never feel that luck is only with you and your trades are moving positive just for you. Luck is with everyone and your trades are moving positive and will positive only if buying is not saturated. So control your emotions and win your Forex trading psychology and exit from a trade timely to earn profit.
Do not do Overtrading
Overtrading is the major problem of the majority of the Forex traders. The beginners want to pick up every single chance of earning profit but it is not possible and this psychology cannot have good results at the end. So win your Forex trading psychology and trade less but trade wisely.
Awareness
The last important principle is awareness. Learn from your mistakes and give time to your learning Forex process. Always trade on the latest market news. So win your psychology and be aware about your mistakes and potential earning opportunities.
Following the principles above as suggested, the traders and investors will be able to win their psychology and trade successfully to earn profit.