Forex Psychology: Emotions Fear and Greed

Greed

Most traders aren't satisfied with 20%-40% profit annually, what these traders/investors want is double or triple their trading equity.

With the right trading strategy, the market can certainly be profitable but greediness is always a factor in any human endeavor, especially in investing. Greed in Forex leads to over trading. When an investor falls in to this trap, there is a greater potential to risk too much. Greed can cloud your judgment quicker than anything else. This is where self-discipline can help you maintain your focus & your profits, to maintain discipline investors require to use the right psychology mindset principles.

Forex Psychology Greed in Currency Markets - Forex Mindset

Forex Psychology Fear and Greed - Forex Trading Mindset - How to Transform Your Psychology Course

Forex psychology - teaches you how to fight your greed & set realistic goals. Greed is what makes most traders to lose. Profit is never enough. Everyone wants to earn more money. Well, some traders do succeed once or twice. That is called good luck. But short-term profits mean nothing. If you focus on proper money management in the long term you'll keep winning.

A good principle is, not to use more than 5% of the margin, and not to risk more than 2 % on any one single trade transaction.

Fear

Fear is another emotion in psychology which affects the market. Poor trading practices, like taking on too much risk with excessive number of trades can magnify the normal stresses of the market place. The best way to combat fear is to learn & understand how emotions affect the markets & learn how to avoid these emotions when trading the currencies.

Identifying longterm trends can improve trading results, identifying these trends can help you as a trader plan the best strategy so that you as a FX trader can maximize profits, & the same time keeping the emotion of fear at bay.

Sometimes, however, psychology problems have nothing to do with your trading strategy. They are the results of pre-existing problems that won't be solved by different trading strategies & methods. Your largest enemy when trading is you. It isn't the market or the online brokers. It is you! If you do not have a professional Forex mindset then you'll make the wrong decisions and lose money on a consistent basis.

FX psychology teaches courage. In it takes a lot of courage, patience and experience to make huge profits.

Hope

Hope can cause investors to make mistakes when it comes to making trading decisions, especially when it comes to staying with a losing trading position for too long. Exit points exist for a reason and losses should be kept to a minimum.

The market may be driven by emotions but it also can be predicted: because it has ALWAYS been determined by the same basic human emotions.

Forex psychology - is based upon how well you as a trader know yourself to be able to profit from your strong points, and also control you weak ones, it has got a lot to do with how successful you will be when it comes to investing. When you truly know yourself, then you're aware of how you are going to react under certain circumstances/situations & you as a trader can protect yourself from self-damaging actions or decisions when it comes to managing a trade transaction.

The right mindset can be a tool that can help a trader control and predict their emotions so that they're able to make correct decisions based on facts. The lack of this psychology can be a hindrance to success since the movements of the exchange currencies are pretty unpredictable.

The right psychological outlook can help traders face the issues and make sound decisions in the end. There should be a balance among all the different aspects of trading that determine whether a trader will be successful when trading.

System Mindset

This is a part of the Forex Plan about mindset

MINDSET & PSYCHOLOGY

Invest without Emotions (greediness, fear, anticipation, impulse, bias, over-excitement)
I trade what my eyes see not what I feel.
I will be patient.

My job description is not to be the trade system!

It is not to decide which signals looks promising and which one does not.

That's the job of my system. My system has a set of trading rules which instruct me this is what I follow. Do not get caught up in price action & make new trading rules & strategies as you go along.

MY JOB IS

To sit patiently & wait for my system to reflect that it is time to enter or it's time to exit. And then with maximum concentration I execute my strategy as planned.

Taking trade positions not given by the trading strategy, second guessing system and not taking those given, hesitating and getting in late, anticipating and getting in early are all common-place and boil down to lack of faith in system & not having a burning desire on accurate execution.

GOAL: To have 100% undivided desire on mastering the ability to execute my strategy accurately.

More you develop the ability to step back from price movement & watch market detachedly, waiting for a trading signal, the easier it'll be to witness the fluctuations/oscillations of your emotions without getting sucked into them and allowing them to throw you off your game plan.

WEAKNESS

I am greedy.
I over-trade
Make a list of all your weaknesses which are interfering with your trading strategy. This is the first step to helping you as a trader to overcome the weak-nesses. Use trading psychology to help you as a trader overcome them.

Note: by noting down your weaknesses you'll begin recognizing them as you progress, once you do this you will start to avoid these mistakes and your results & profit will improve.

To learn and know how to write these guide-lines on your trading plan, read the plan guide at the key concepts lesson section.

Learn More Topics and Tutorials:

Trade Forex Trading

Forex Psychology: Emotions Fear and Greed

Greed

Fear

Hope

System Mindset