Forex Trading: The Four Demons of Trade Psychology

When it comes to trading in the financial markets, it is not just the lack of expertise that causes the demise of thousands of careers in the market. There are several other culprits that contribute to it. The most successful traders are generally emotionless about their trades. They are meticulous planners, foresighted and confident – the one thing they keep out of their career is sentiment.

Fear

The forex market requires quick decision making, apt analytical skills, foresighted instinct, and confidence in dealings. Fear is what holds all these traits captive. It makes the trader focus more on what he might lose if he takes a particular decision, instead of considering the rewards they could reap from it.

Greed

One cannot deny the fact that most traders in the market are money-oriented. The bigger the profits the better it is. But when greed takes over, it makes traders more compulsive. Instead of being calculated, take up every opportunity they come across and try to make money out of it. This often leads them to lose focus and make bad trades that can ruin them.

Euphoria

With the promise of infinite wealth, this demon leaves its victims miserable and destitute. A person suffering from euphoria sees nothing but limitless prospects of earning profits. It makes traders lose their sense of relevance and haste into decisions that cost them heavily. What one needs to understand is that the win or loss on one trade does not have impact on the result of the following trades, so it’s better to keep the emotions in check.

Panic

In contrast to euphoria, a trader in a state of panic sees only losses in the market. They envision no possibility of profits in any trade he pursues. In the forex market, one person’s loss is another person’s gain which automatically renders this psychological demon useless. It’s true that one does not always have gains in their dealing, but if a person that makes decisions based on pessimism won’t last long.

Success and failure in this particular market is not contingent with luck. It is the logical consequence of the choices a trader makes. Keep your emotions out of your trade dealings, and you will be set to deliver. To help you learn forex trading through tips and strategies online, our forum provides everything you will need to excel. Take a look at our forex trading tips TODAY!