This article is about recognising and dealing with losing attitudes in the foreign exchange market.
The foreign exchange market is an extremely challenging market to work in. It requires intense concentration and nerves of steel to calmly go through one session after another of fluctuating market conditions. To succeed in this market, you have to be in total control of your emotions at all times.
Losing Attitudes in the Foreign Exchange Market
You have to know your fears and confront it. The most common fear experienced by traders is failure and this distorts their idea of how they should react to certain situations. Fear of failure limits the amount of information you are able to process effectively and limits the choices you have. This is one of the reasons why so many traders cut their profitable trades short and allow their losses to run.
To control fear of failure you should focus on your trading system and plan. Sit down before you enter the trading market and go through the method of your trade. You should bear in mind that most traders fail at trades, including the highly experienced. You should accept this and work on not repeating your mistakes as you gain more experience in the trading world. You should build on your confidence and learn to trust your decisions. Above all, you should accept that you are not trying to prove anything to anyone – you are running your own business.
Those who enter this market often have the perception that they can make millions in a very short time period, without having to do much work. This is a complete and total misconception. Forex trading takes a lot of hard work and although there are those who have made millions in the market, they had to work for it. It did not simply fall in their laps. These stories make traders feel that vast amounts of money are only one trade away. This is the point when greed steps in. It normally happens when you are in the midst of a winning trade and you believe that the market will continue in your favour. It sometimes happens when a trader is in a losing trade, but they believe that the market will soon turn in their favour.
To alleviate these feelings of greed, you must be aware of your feelings. Your first thought should be that you will make losing trades and should accept it now. You should review the results of your trades on a regular basis by maintaining a trading journal. This will allow you to see how often you deviated from your trading plan or acted in an impulsive manner by altering or abandoning your trade. These actions signify greedy reactions to the market. You should not plan what you can do with money you have not earned yet. This will cause you to divert from your plan in a bid to make a required amount of money.
When you trade in the foreign exchange market, you need to continue your trades even if the results have turned against you. The nature of this market often predicts good times after you have experienced bad, hence you should be able to accept both.
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