Currency Trading Tips:

4 Psychological Threats Every Trader Should Know About.

By: Jay Molina

From: http://myfxinvestment.com/

The mental aspect of trading better known as trading psychology is

regularly ignored by most traders. As a result, these traders suffer

from the psychological manipulation of the markets. The reality is

that the markets and currency prices are an expression of what

traders are feeling.

For instance, whenever Forex traders are feeling uncertain a support

or resistance level is formed. The emotions that are felt by the

market participants define what currency prices will do next.

Trading psychology plays a very important role in Forex trading

and understanding how your emotions and personality can affect your trading is crucial for

success. In this part of my currency trading tips series I would like to talk about 4 psychological

threats that you should know about and that can prevent you from reaching your financial goals.

Greed:

Greed is one of the main cause why Forex traders to lose money. The great amount of leverage

in trading currencies allows FX traders to make very fast and large profits, but the same theory

applies to losses. Just because you have great returns on investment in a couple of hours on a

trade does not mean you should expect it every day. Therefore, it is very important to set realistic

expectations when you are managing your trading account.

Fear:

Fear is the emotion that tells us to not do things that we feel are too risky. Fear is an emotion we

need in our lives but when our levels of fear are too high it might prevent us from doing things

that are necessary. The main fear Forex traders face is the fear to lose money. This a normal fear

since no one wants to lose money, but it is irrational if it doesn’t let a trader take and manage his

trades properly.

For instance, a trader might take a couple of losses and then be too scared to take the next trades

what could be winning trades that could have covered the previous losses. This is an example of

the negative effects of fear.

Hesitation:

Hesitation is defined as the lack of action because one is feeling doubtful or uncertain. Currency

trading can sometimes be very fast paced and a trader’s ability to react to the markets will affect

their success and profits. As a result, hesitating to take action and take advantage of the

enormous opportunities the market has to offer can be very detrimental to your trading career.

Ensuring that you never miss out on good trading opportunities because of hesitation can be

easily done by just following a strict trading plan and using effective trading systems.

Uncertainty:

When you feel uncertain you just don’t know or have any idea of what is going on in the

markets. This happens to all traders, however; not everyone reacts the same way. The truth of the

matter is that uncertainty is an emotion that can make you make irrational decisions, and

irrational decisions lead to losses.

The best piece of advice I can give you to fight uncertainty is that “when in doubt, stay out”. I

have learned that whenever you are unsecure or uncertain about a trade you are more likely to

lose money and commit mistakes.

Taking control of your trading career will require to also taking control of your emotions. The

best way to take your emotions out of your trading is by using a trading plan, a solid trading

strategy, and focusing on the process instead of on the profits.

Best regards,

Jay Molina

Pro Forex Trader & Educator

“Failing to plan is planning to fail”, the best Forex traders have a well defined

trading plan. Get a copy of my secret Forex trading plan by clicking here!