One aspect of Forex trading which is often overlooked is psychology. The truth is, your state mastering forex mind has a major impact on your level of success. If you haven’t given your psychology much focus, read on. This article looks at mastering Forex trading psychology in extensive detail.
Psychology is simply your state of mind. As with any other skill, competence is irrelevant if your state of mind isn’t right. This is particularly true for Forex traders. For me, keeping psychology in check is critical. Those that don’t do this run the risk of making mistakes, which damages their profitability in the process. This is where a trader abandons their principles of risk management in an attempt to quickly recover losses.
This move is often a result of traders being unable to move on from a loss. Having worked with numerous traders over the years, I’ve come to realise that trading psychology is really driven by two things. The first is thirst for constant profitability. The second is a fear of failure. For me, these feelings are at the root of some common scenarios traders face throughout their career. The Get Rich Quick Trader A good percentage of traders want to trade Forex in attempt to get rich quickly.
This is the wrong mindset and will lead to losses. Remember, leverage is essentially capital that a broker lends to a trader to allow them to make bigger trades. It can significantly amplify a trader’s profitability. But this principle also applies to losses.
In the wrong hands, leverage can lead to all account capital being lost. It’s a dangerous game, especially for inexperienced traders. In fact, I’d say this type of trading is closer to gambling than professional trading. If your motivation to trade Forex is to get rich quickly, it’s time to alter your psychology. Firstly, you need to accept that Forex is no different than other profession or skill. Becoming competent requires dedication over a sustained period of time. All successful traders that I know spent years mastering the basics of Forex trading.