Some people compare Forex trading with gambling – the same passion, adrenaline, excitement. Yes, trading is characterized by all these emotions too. Looking at the ever-changing charts and price fluctuations, you immediately start imagining how much you could earn, or thinking how much you just lost. So you get overwhelmed, it becomes difficult to control your emotions. The main thing here is to understand that having emotions is totally normal. We are all human and have feelings and emotional responses to various situations. Both novice and professional traders have to deal with feelings too. The difference here is that seasoned traders have more experience and already learned how to manage their emotions and maintain self-control in any scenario.
So, when can it be difficult to stay calm and keep a cool head?
- The trader is on a winning streak. The trader may get too cocky and overconfident. He starts to overestimate his ability to anticipate the market situation. Without realizing it, the trader gets caught up in this trap when he relaxes and loses his vigilance, thinking that from now on everything will go his way. And that’s what will eventually drain his account.
- A series of losing trades can trigger the desire to win back the losses as soon as possible. It is very important to keep your greed under control, otherwise, it will let you down. Track your feelings, when you notice even the slightest signs of greed, try to overcome it. It’s better if you pause and step away from your computer after an unsuccessful trade. Give yourself a minute or two to cool down and analyze the situation.
- Treating Forex trading as a game. If you want to gamble, go to the casino. In trading, you need to be responsible and understand the consequences very clearly. Remember, that the proper approach to trading implies strict discipline, a cool head, and almost no emotions.
What to do?
It’s important that you train yourself to act only on the signals of your trading system. The signal should be completed too. It often happens that a trader, fearing to miss out, opens a trade ahead of time, and then begins to worry that entered the market too soon and berate himself. To overcome the fear of the unknown, beginner trader should determine for himself how much he can afford to lose if something goes wrong.
This amount should not cause much damage to the entire deposit and make you feel anxious. For this purpose, there are money management strategies and protective orders. This way, even though we won’t be able to predict the outcome of the trade with 100% certainty, but we will know the consequences, both in case of a positive and a negative scenario.
- Don’t trade all the signals. Pick just a few of them, the ones that are more clear than others. In this case, you won’t need to guess and trading will be much easier and you, in turn, will be emotionally stable. Also, always check out your trading plan for the current day and highlight the moments where you need to wait for the signal. This will help you understand where to enter a trade and when.
- Train yourself to follow the rules from the very beginning, and over time it’ll become your habit. And if you don’t follow the rules, it will also become a habit, and it’s only a matter of time until you lose your entire deposit.
- The ability to control your emotions in trading is one of the prerequisites for success. A calm attitude to trading, reasonable goals and self-confidence can even compensate for the lack of experience, technical knowledge, and big deposit. It is important to develop a strong trading mindset not to let the market throw you off balance. Remember, emotional trading can affect not only your wallet but also your health. So, keep it cool.
If you like our articles, follow us on Facebook and Instagram. Stay tuned for more interesting posts on our blog. We post new material several times a week.
