Trade Forex Trading

Forex Psychology: Emotions Fear and Greed

Greed

Most investors are not satisfied with 20%-40% profit annually, what they want is double or triple their trading equity.

With the right trading strategy, the market can certainly be very profitable but greed 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 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 and 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 shortterm profits mean nothing. If you focus on good risk 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 transaction.

Fear

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

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

Sometimes, however, psychology problems have nothing to do with your strategy. They are the results of pre-existing problems that will not be solved by different strategies and methods. Your biggest 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 investment decisions, especially when it comes to staying with a losing position for too long. Exit points exist for a reason & 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 driven by the same basic human emotions.

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

The right mindset can be a tool that can help an investor control and predict their emotions so that they are 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 investors face the issues & make sound decisions in the end. There should be a balance among all the different aspects of trading that determine whether an investor will be successful when transacting.

System Mindset

This is a part of the Forex Plan about mindset

MINDSET & PSYCHOLOGY

  • Invest without Emotions (greed, 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 trading system. My system has a set of trading rules which tells me this is what I follow. Don't get caught-up in price action & make rules as you go along.

MY JOB IS

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

Taking trades not given by the trading strategy, second guessing system and not taking those given, hesitating & getting in late, anticipating & 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 focus on mastering my ability to execute my system accurately.

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

WEAKNESS

  1. I am greedy.
  2. I over-trade
  3. Make a list of all your weaknesses which are interfering with your trading strategy. This is the first step to help you to overcome these weaknesses. Use psychology to help you overcome them.


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

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

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