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The Forex Trading Psychology

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The Forex Trading Psychology

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Many traders-beginners are sure, that success on Forex depends mainly on a trading strategy and risk management, and don't think about the psychological aspect of the trading. However, emotions may affect trading process very much. The psychology of the Forex trading really exists and it is one of the things that differs a successful trader from a losing one.

Many traders-beginners are sure, that success on Forex depends mainly on a trading strategy and risk management, and don't think about the psychological aspect of the trading. However, emotions may affect trading process very much. The psychology of the Forex trading really exists and it is one of the things that differs a successful trader from a losing one.

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The Forex Trading Psychology

  1. 1. The Forex Trading Psychology
  2. 2. Most of people think that the success on Forex depends mainly on a trading strategy and risk management, dismissing the psychological aspect. However, it influences the final trader’s mindset and the attitude to the Forex market. It is really important to develop a trading plan, but it is just a piece of the pie. You need to know how to use your trading system correctly and how to react to the market behavior without panic. The psychology of the Forex trading really exists and it is one of the things that differs a successful trader from a losing one.
  3. 3. Why do many traders lose?
  4. 4. You must be heard that most newbies blow their accounts while trading on Forex. Such people often say that Forex is a scam. But their main problem is the wrong attitude to the Forex trading itself. Most of beginners suffer from their own unrealistic expectations. They expect that the Forex trading will make them rich and they will make $10000 from $100. However, even experienced traders don’t usually make more than 10-15% of the initial depo in a year.
  5. 5. The cause for losing money is the idea that a trader needs to make money and achieve success. Such the emotional state makes them open new deals nearly every minute, without any analysis, and without following the trading plan. Remember, that you don’t need to open deals because you feel you have to. Do it only after you get reliable signals.
  6. 6. What emotions should Forex traders watch?
  7. 7. Most traders who have just began their Forex journey want to make more money and wait until their trade will go on further and bring them a great win. However, it rarely leads to successful trading as trends may be volatile and can change their movements very often. Risking too many lots per one trade is the next mistake that traders make due to greed. Expert say, that it is always better to risk not more than 2% of your capital. It helps to control your greed and save your funds in case of a losing trade. Greed: the most common feeling
  8. 8. It is natural for people to feel fear while taking the first steps into the Forex world. If you are sure that there are signals for opening or closing a deal, you would do it without hesitation. This emotion can also come to you after a losing trade, especially if you have lost more money than you could afford. How to manage such situations? Treat the market with logic, always analyze its technical patterns and make sure you don’t risk too much. Fear of entering the market and exiting from it
  9. 9. Traders often want revenge when they were planning that a deal would work out, but this didn’t happen. The best advice here will be to remember that Forex is an unpredictable market and there are no sure ways to win on it. Once you start, you should keep in mind that your deal may reach the stop loss level even if you planned it well. This happens and it is normal for the market you work with. It is in its nature. Better turn your trading terminal off, think what was wrong in your trading, develop your trading system, read an article about the trading psychology, drink some tea. And just after you have calmed down, get back to work. The wish for revenge
  10. 10. No doubt, many traders enjoy this feeling. Nevertheless, this can cause certain problems too. People may become over-confident and risky because of the euphoria. Of course, you can wish to enter the market just after you have closed a couple of successful deals, but there are no guarantees that it will work the same way. Be cautious and open deals only after finding strong signals for that. Feeling euphoria after closing winning trades
  11. 11. How to create an efficient Forex trading mindset?
  12. 12. The best way to become a successful trader who will earn money on Forex for sure, try to create the proper understanding of psychology. It may be hard and you will need to take efforts to learn to control your emotions. The good news is that it’s not so difficult as it may seem for the first time. Just accept certain facts about the Forex market as inevitable normal things. You may keep in mind that trading can be profitable but not to those people who go ‘all in’ and risk a lot. The next most important point is mastering a trading strategy of your choice. If you understand how the market works, when it is better to enter it and exit from it, you will be more confident and enter it without fear. Find out your risks for all the trades, another way your emotions will come and ruin your plans. Do it for every deal, and never place any of them before calculating your potential risks and profits. Forex is more about analysis and math, not the intuition. 1. 2. 3.
  13. 13. Thank you for watching the presentation!

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