Trading is a profession that demands extreme control over the mind. After all, precious money is involved, which could be lost in the blink of an eye. As much as trading depends on strategies, efficient and faster platforms and risk management; trading psychology is also an important aspect here.
Forex investors drive market activity; hence trading psychology also affects and is affected by the market. Every day, trader perceptions change, based on developments all around the world. Market sentiment is driven by such trader perceptions and emotions.
Common Emotions that Affect Trading Decisions
It is not that emotions are always harmful, but they should not get in the way of logical reasoning, or negatively impact one’s analytical skills. Markets see a range of emotions every day, such as:
The ability to understand the markets and identify patterns and trends is important for traders, but so is the ability to control these emotions.
Ability to Follow a Proven Method
Consistently profitable traders find an edge and repeatedly exploit it. They do not act randomly but follow a fixed path that has proven successful in the past. There is no place for impulsive decisions in the market, if you want to survive. If one strategy is proving to be a waste of time, you must design another strategy, taking all factors into account, which brings us to the final point.
Awareness is the Key
We cannot stress enough the importance of getting the facts straight. Assessing the global economy and its stability, keeping track of central banks and press releases, looking out for reports of large companies making deals that could create a breakout trend, focusing on a currency pair that is consistently performing well and so on. These are some of the factors you should be aware of, and those who do, possess the attributes of a good trader.
(Visited 7 times, 7 visits today)