Forex Trading Psychology- Discover the Top Emotions that Destroy Forex Traders

Most people end up losing a lot of money in Forex as they fail to master their emotions. They also fail because they don’t have the right mindset to trade effectively. There are several emotions that have been destroying traders over the years. They include greed, fear, panic and euphoria. Let’s take a look at each of these emotions and see how they affect a traders’ performance in the Forex Market.

Greed

Greed is the number one enemy of all forex traders. The truth is, most traders are known to be money oriented and profit seekers who basically attach a great importance to financial success. They have a very powerful drive for making money and, therefore, are unable to withstand the intense pressures associated with the forex trade markets.

How can a trader refrain himself from being overcome by greedy desires? The first step is to develop a disciplined approach towards the trade by setting a target and stop trading when your goal is reached. Being too greedy will refrain you from successfully acquiring the required profits.

Fear

Fear is the opposite to greed. While greed pushes traders to dig deeper and deeper in order to reach for the goldmine in the trading market, at the same time fear discourages them by convincing them that regardless of how much money and time they spend, they might end up failing terribly. A fearful trader is more likely to make irrational decisions and will be unwilling to act on the basis of rational expectations. Likewise, a fearful trader will not spend his time waiting for the realization of a more profitable position because he is too afraid to even face the results.

The best way to curb fearful trading decisions is avoiding over-leveraging your account and risking too much in one transaction. Another way to avoid the severe effects of fear is convincing yourself that you are in control of your choices and that anything is possible in the forex market. A calm approach is the only way to have a successful trading experience.

Euphoria

Most traders develop a certain emotion known as Euphoria which tends to promise the trader of huge successes. The only solution to this is the understanding that winning consequently does not guarantee the same luck in the next trade.

Panic

Panic can greatly destroy a trader’s chances of making profitable trades. When a trader gets panicked during trading, he only sees failure ahead of him. In other words, all he sees is huge losses with no possibilities of making a profitable trade. As a trader, the best way to avoid finding yourself in such scenarios is having self-confidence while making trading decisions. The trader must also understand that the Forex market changes often and therefore, it’s always good to make predictions before getting involved in live trading.

The only way to deal with emotional problems is developing a logical approach to trading. The other way is to understand the market mechanisms and what is required to make it in the forex market. Remember that these emotions are just natural and controlling them will help you make decisions that are not emotionally connected.