Today, to conclude successful transactions on the sites of the leading currency exchange, traders are offered an impressive set of various tools. At the same time, most novice players manage to quickly master the numerous options and techniques for concluding and maintaining contracts. However, not everyone, after the loss of the first deposit, finds the strength to continue the struggle. The psychology of trade has its characteristics and secrets.
Every broker should build impenetrable mental armor in all situations. It is easy to understand that the primary goal of all participants in exchange operations is to make a profit, that is, make money. The ideal scheme involves quick returns with a minimal investment with relatively little risk. However, such an attractive situation, which is inevitably present in the psychology of every trader, is rare enough.
Psychology of Forex Traders: managing emotions
According to statistics, more than 90% of novice traders lose their deposits due to insecurity, fear, excessive hopes, and unbridled greed. Of this audience, less than 10% replenish their balance again and continue to fight for their interests and material well-being. However, knowledge of the psychology of Forex trading can help you find the strength to become in this exciting profession.
As useful tips for beginners, you can offer the following rules:
- After learning the basics of forex trading, exercise longer with demo accounts. And although contracts with conditional money do not cause the flow of emotions that arises at the risk of their “hard-earned money,” it is they that allow you to hone specific work skills to perfection.
- Do not risk big money at the beginning; a small deposit of $ 100-200 with a good one will allow you to appreciate your emotional readiness for the inevitable exchange excitement fully.
- If your open position makes a profit, do not fall into euphoria, imagining in rainbow colors what you will spend your money on. Forex Psychology is based on the formation of habits, both to losses and gains. So close the growing position and pause until tomorrow.
- If the contract is approaching the stop loss level, you should not panic and increase this parameter in the direction of loss in the hope of a change in the market. So usually, the first deposits merge.
It is essential at the start to understand that it is the psychology of Forex trading that plays a vital role in this market. If your emotions prevail over you, then no abilities and knowledge will help to bring even the most promising deals to a victorious end. Fear, panic, irrational thinking, a desire to make big profits right away, insecurity in one’s abilities – all this storm in the minds of most novice traders is the main obstacle to success.
Self-analysis and forecasting
The incompetence causing insecurity among beginners is typical.
The following techniques help to overcome this negative factor:
- First, recognize the following fact – the psychology of a broker always assumes a slight fear for the success of the transaction. At the same time, all market participants are initially in the same conditions;
- Practice regularly in analytics and in assessing the accuracy of your forecasts. For these purposes, you can get yourself a notepad or file in Word or Excel, into which you need to enter all your statistics;
- Study all the financial and economic news of the countries whose currency you prefer to work with. Awareness will give you confidence, and over time, the development of analytical skills will allow you to find hidden mechanisms of influence in publicly available information quickly;
- Always develop a clear trading plan based on the results of market analysis, economic situation, personal forecasts, and sentiments of experienced traders;
- Adhere to your own trading rules that match your character and emotional inclinations. Some hyperactive traders can “catch the wave” all the time; others prefer a small but sure profit, while others rely only on their intuition and luck.
Always evaluate your success with the results of monthly trading. Try to diversify (separate) your assets and transactions in various positions. Then a minus in one direction can always turn into a more significant plus in another.
Final words about Forex psychology
The psychology of Forex traders should be based on relentless prudent behavior. It is the primary recommendation for all participants. Emotions often prevent players from taking well-thought-out steps that are reasonable and common sense. But daily independent training, stabilizing the emotional background, and following the plan will allow you to curb your natural arousal. And over time, each contract will turn into a routine work, which can bring a good profit not so much to succeed as to prudent and restrained players.