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Deal With Your Psychology Before Dealing With Your Money

Date Added: May 06, 2013 05:22:15 PM
Author: Forex Trading
Category: News: Business
The Forex Market has exploded onto the scene & is the HOT financial market. People are trading in millions & making valuable profits too. This often leads us to invest & earn some decent profit for ourselves too; through Forex Trading. Thus, we sign up with a Forex Trader and have tried & used the DEMO Accounts being successful considerably. Now, is The Time for Live Accounts? Often even after going through a definite period of time dealing with Demo account we are unsure about the LIVE Account. The only reason for this unsurely behavior is the involvement of REAL MONEY. This in turn plays a great deal with our Psychology. Trading Psychology: A very less-spoken secret about trading is its PSYCHOLOGY which forms the most important element of any investment process. Trading Psychology is nothing but the state of mind of the trader while trading & its capability to control empowering emotions. The only sure-shot way to successful trading is taking control of your Emotions. While trading or at the beginning; traders are often gripped by common emotions of FEAR (Apprehensions) OR GREED (Sureness) depending how the initial trades start off. Invariably, at all times of trading one should keep in mind that Losses are a common aspect of this trade. For successful trading, one not only needs to have sound technical knowledge & resources but should also have a broad spectrum about the trading business. A sound frame of mind often leads to correct decisions which in turn garner desirable profits. There are types of Psychological myths & traps that if conquered upon; along with fundamental & technical analysis leads to expertise in trading. Common Psychological MYTHS in the trading world 1) Holy Grail Myth: There is hardly any chance or luck in Forex trading as it is in gambling or placing bets. Simply because forex trading IS NOT gambling. The trends are based upon the technical &fundamental factors & thus a strong trading plan will reap the boons. 2) The Monday Effect-A very common myth, many traders believe that on Mondays will follow the prevailing trend from the previous Friday. Thus if the market was up on Friday it will prevail all weekend, come Monday it will rise again. Are we having Monday Blues? Probably. For Such trends have less to do with days & more with activity in the market. 3) Expert Myth: It always plays a great support for our psychology to have an expert by our side during crucial decision-making times specially while involving Money! But, we must not forget even Experts are human beings & prone to mistakes. Its best, to understand the technicalities & well study the market before investing thus letting the Expert be Ex-of your decisions. 4) RUMOR DOESN’T HAVE IT: It is a pre-requisite to keep a tab on world news & events that often leads to changes in the markets. But moreover, it is important to differentiate between the real news & the rumors which are often planted by financial institutions in order to move the position of market. Having done with the common myths which lead to a great disturbance of the Psychology, lets concentrate on the actual demons-“The Traps” which many often traders do fall prey to. 1) Fear/ Apprehension/Despair: Losses usually lead to fright. This in turn can lead to inactivity in trading. The best way to overcome this is to use the “STOP-LOSS orders. You cannot be afraid of a loss you assigned on your own. 2) Greed/Super-Sureness: If or not it usually arises from making small profits, the trader starts anticipating more profits & thus invests higher amounts of lots neglecting the initial investment strategy formed. Investor should focus on Stop-Loss & thus ensuring his capital before making or losing profits. REMEMBER TO DEAL WITH TRADING PSYCHOLOGY ? Trading is speculation which is all about taking risks in order to earn profits! ? Assess your reason on market- Boredom/ passion/ way of life/hobby? ? Invest only as much as you are prepared to Lose. Read: Risk Management. ? Do a thorough research of the Forex Trader you’ll be dealing with in terms of platforms, Spreads & Sales Support. ? Market prices are NOT biased on your emotions & expectations. Thereby, stick by your TRADING STRATEGY. ? Market always gives occasions, so the one you lost won’t be the last one. ? Trend is Your Friend – try following the Trend, it always works.