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Forex Trading - Trader Psychology

Guest post by: John Clark

Article Overview: Professional athletes are often told by their coaches that their attitudes on the field can affect whether they win or lose. That's even more true in Forex trading. It sounds like the standard motivational speech, but having the right frame of mind can definitely influence your trading results. There are many aspects of Forex trading that are outside the investor's control. Forex market participants number in the millions - traders for the world's largest banks, huge governments and individuals just like you. Unlike stocks, even the big traders have a tiny effect on exchange rates.

Forex Trading - Trader Psychology

Professional athletes are often told by their coaches that their attitudes on the field can affect whether they win or lose. That's even more true in Forex trading. It sounds like the standard motivational speech, but having the right frame of mind can definitely influence your trading results. There are many aspects of Forex trading that are outside the investor's control.

Forex market participants number in the millions - traders for the world's largest banks, huge governments and individuals just like you. Unlike stocks, even the big traders have a tiny effect on exchange rates.

Even when setting interest rates and other actions that influence inflation, the largest governments can have no immediate impact on exchanges. The Forex markets are simply too large - $2 trillion daily - for any one player to dominate the action.

Trading strategies, which are essential, can increase the odds of making profits and help minimize or avoid losses. They give the knowledgeable trader that tiny edge that can make the difference between winning and losing on a given trade, or over time.

But before looking at market influences, and even before developing a set of technical strategies that help guide trading choices, the novice Forex investor has to honestly and objectively examine his or her own attitudes.

Forex is fast-paced, complicated and requires a well-thought out game plan. That game plan has to be executed with nerve and skill. Trading successfully in a demo account for several weeks is essential but can lead to unwarranted confidence. Traders who invest Monopoly money will often take chances, leading to successful trades, that they wouldn't dream of taking with real money.

Real trading requires answering honestly a number of questions that can be difficult to answer objectively when the subject is the self-same trader asking them. What are your financial trading goals? Looking for a quick buck? Seek elsewhere. You will have losses that wipe them out. Looking for secure, low-risk capital accumulation? Try AAA bonds instead.

Forex trading can be simultaneously a stimulating intellectual game and an exciting adventure. The thrill of victory! The despair of (temporary) defeat! The mastery of the intricacies of Fibonacci, Parabolic SAR, Stochastic Oscillators and Doji Stars. All this, and much more, is part of Forex investing.

As a result, you will need to be very frank with yourself and decide how (and whether) you are prepared to deal with pressure and fear. Even professional traders do not have any certain system of ensuring profits and avoiding losses.

The pressure of deciding when to buy and when to sell is many times larger than in stock trading. The fear of loss is greater, in part because of the amplification provided by 100:1 or larger leverage.

Even winning can be problematic. With practice and persistence, provided you don't quit too soon or run out of money too quickly, you will have periods when it all seems laughingly easy. That can lead to euphoria, which is great. But it can also lead to cockiness, which is fatal. Nothing will wipe out a trader quicker than arrogance. Confidence is essential, vanity is suicidal.

The other side of the coin to be avoided is too much second guessing. Successful trading requires bold moves based on sound judgment and confidence. Every decision is a small leap of faith, since no one can know in advance for certain what the outcome will be. Probability of one degree or another is the best that can be achieved.

All this will be accompanied by the fear of loss of capital, which often leads to panic selling in the face of what would have been a temporary price movement. It is of such panics that depressions are made, both economic and psychological.

Forex is a roller coaster ride. But if you have a good inner ear and a strong stomach, bolstered by the brain of a statistician and the nerves of a pro billiards player, you will be well suited to end the ride with full pockets.

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Article Tags: banks, exchange rates, governments, investors, market participants, professional athletes, stocks
Referred by: http://www.franchisefix.com/



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Re: Hi - Welcome to the Forum. Join in on the group discussions. Not sure there is much on Forex. Do you trade Forex daily and make a living on it? Maybe you can write up a review of your day to day to give us a glimpse of a Forex Traders lifestyle.
Re: Internet Users Hbk http://www.internetscamsanonymous.com - As to your Binary Options question, certainly looks interesting. However, at a glance on the subject, I note that the broker fees can range up 15-20% of the trade, while Forex, the fee is gained from the spread. Forex operates 24 hours per day for 5.5-6.5 days per week, and is the largest market in the world don't remember which it is. Again at a glance, Forex may offer more controls over your buy sell options. It appears the you can still employ some hedging schemes with Binary, while some Forex brokers have stopped that capability. Many Forex brokers are moving off shore to help keep the spirit of the trading floor open, which make it more risky for you, but give you more room to trade as you wish. I see some of the same type of promises made here with Binary and I pointed out for Forex. Picking a broker is very important. I didn't not any demo accounts for binary trades. Best to you, I will still with Forex for now. Take advantage of all the free information that you can find on the internet
Great To Be Here With You - Hello New Friends Fellow entrepreneur, dozen boot strap companies, grew last from $137 to $15m plus Chairman, President and CEO, Founder, ..... Retired Mentor and international business adviser to 100's of CEO's/MD's start-up and growth companies, Business models, business, financial and marketing plans Large scale international real estate development project financing, sales and investment Forex Trader Writer Thanks, enjoy yourself
Re: Investor needed to Generate Wealth in the Market - I actually have a partner that trades Forex. He went through a lot of classes and learned a great deal on charting and technical analysis. I use similar charts that he uses and the concept is almost the same. I just prefer to trade stocks over $5 dollars in the major exchanges, mainly the s&p 500. You get familiar with certain specialist on each stock and the stocks in the s&p500 only have one specialist per stock. So you get familiar with how they like to set their price. There are also variables in the market that allows you to trade with the best possible outcome of making money if you know what effects what. I think an average of 15% return on investment a month is pretty good. I have pulled 180% in a little over 2 months before. The market corrects itself about 3 to 4 times a year, this is were I make most of my money. Making 50% or more during the times of these market corrections is not hard to do at all. If you are making more then 15% a month on average then keep doing what your doing. Im sure any investor out their wouldnt mind making as little as 3% a month on his/hers money. Well im willing to paper trade with any investors that are serious before any commitments are made. I appreciate the advice. Happy Trading
Hi - Hello people, I hope to be able share a lot of experiences and strategies in this group. I will be reviewing all your opinion on Forex. Well that’s about it word to the word be extra wise about your investments.


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