This article is meant to give traders an X-ray of their minds by examining why they make their own decisions. Some of it works out well, and some of it doesn’t. The psychology of trading is a huge thing. When you trade Forex, commodities, or stocks regularly. It’s the psychology of trading, not the need for academic knowledge or skill in implementation. That is thought to be the significant cause of mistakes.
Mistakes are made over and over again by budgetary dealers from different backgrounds. This suggests that these mistakes are caused by the things we all have in common. If you want to do well in trade, you need to know these four psychological tips:
- Patience
- Don’t be too confident
- Never anticipate quick gain
- Anger and fear (Emotional intelligence).
Patience is a Quality
It’s important to keep your patience since it takes time to learn how to be reliable and productive in an environment that is always changing. Remember the Marshmallow test? If you don’t know, in the 1960s at Stanford University, In the early 1970s, the soft, sticky treat was used in what is now known as the marshmallow study, a set of groundbreaking brain research exams on more than 600 kids.
Researchers at Stanford showed preschoolers a snack that was either sweet or salty. The kids were told they’d get extra money if they didn’t eat their snacks for 15 or 20 minutes. If they can wait, they’ll get two tasty treats instead of just one. In the long run, being patient in FOREX trading pays off because it lets you take a break and wait for the right trading setup.
Don’t be too arrogant.
The second thing you can do to get an edge in Forex trading is to be careful about trading happiness. People care about themselves. Our egos want to be liked by showing that we understand what we’re doing and that we’re better than the average person. Any sign that confirms these things will make us feel better about ourselves and give us a stronger sense of self-love.
The problem is that this is often where traders give in to their tendency to be too sure of themselves. It’s not unusual for traders to win a bunch of trades in a row and then think they can’t go wrong in the future. Accepting this is often a hasty move that will only lead to disappointment. Make sure you always look back at your trading days and look closely at your wins and losses.
Never anticipate quick gain.
This also has to do with being greedy. What do people who don’t know much about Forex do when they need quick cash? They make trades with a lot of money and a lot of lots. But when you choose a huge parcel estimate, you’re also putting a huge amount of money at risk.
Forex traders only think about one possibility when they do this and are blinded by how much they can come out on top if the trade goes well. They don’t think about or care about another possibility: if the trade does not go as planned, they’ll lose a huge amount of money. Also, they could lose all of their money in a few more trades. Traders with experience never do this! They always do a great job of managing risks.
Anxiety and rage
One thing that is very important to know is that anger and fear are normal feelings people have. It makes no sense at all to kill them. We can learn how to respond to them with a little practice and thought.
When a trader finds out something unusual, like a stock market crash, has just happened, their gut is telling them that it might not be the best idea to not only open exchanges that haven’t been used but also to hold resources that can be traded. So, they start selling their things and turning them into cash, not to mention their reluctance to trade in the current market.
As for anger, it’s also a part of how we’re built up as passionate people. When the market goes against the trader and causes them to lose money, they often lose control of their anger. This makes it hard for them to see how the market is moving, so their open and closed approach is based on how they feel instead of how much money they have.
Conclusion
From looking at the psychology of Forex trading, traders can only learn one thing: they need to make a trading plan and stick to it. As a trader, you should feel free to look into every other possible solution, but chances are you’ll still stick to a basic trading plan. Traders have a right to be afraid while they are exchanging.
