Trading psychology is very important when it comes to being a successful trader and unfortunately, this is an area of trading strategy that is often neglected. Most traders focus exclusively on their systems and while this is vital to trading, it is only one area that needs to be understood and perfected. Understanding the psychology barriers that will impact your personal trading is just as important as sticking to your system. Here we will look at some of the most common psychology mistakes in a trading environment.
Focusing on Your Emotions Instead of the Trade
It is impossible to say that emotions should never come into trading. As long as people are trading, they are human and humans have emotions. The mistake comes when you let your emotions take control of you so that you are focusing more on the emotions than the trade. This can often be managed by being prepared. You will focus less on your nervousness or fear if you have done your research and made a plan and you are following your strategy step by step. Focus on the details of your plan and you will be able to keep your emotions in check.
Accept Your Emotions
At the same time as you need to learn how to control your emotions in order to be able to trade effectively, you need to accept that emotions are a natural part of trading. Even experienced traders feel some level of anxiety when they are trading because trading enters the realm of the unknown. It is better to accept the emotions, realise they are not permanent and then focus on the trade.
One of the biggest reasons why forex traders lose in the end is due to greed and learning to control greed is a big step towards success. Never look at someone who was successful and simply jump on the bandwagon without understanding how they became successful. Create a daily target and stop once you reach it – don’t look back at charts or think you’ll just make one more attempt for more profit. Follow your strategy.