Currency trading, just like other trading fields, involves the risk of loss. This risk increases because of the trader’s psychological weaknesses. Human features make the difference between the successful and always losing investor. Here’s how to avoid making psychological mistakes while Currency trading.
There have been written many books about the psychological aspect of the trading business and Currency trading is no exception, even if the risk is diminished here. History, other people’s experience and impressive statistics have proven that more people loose, while trading, than win. Economic techniques, forecasting methods and communication technology have advanced over time, yet we still see there are no changes in the statistics: more losers than winners. This is due to the fact that human nature is the same and it is the one that we should pay more attention to.
The probability of becoming one of the many persons who act buy brics reserved currency according to their feelings and loose the invested money soon after is very high if you do not pay attention to written facts:
– Human emotions have to be controlled!
– Don’t act upon fear or hope! Fear of loss leads to it and so does hoping without basing your feelings on real facts. (You could be an expert in Currency trading and it wouldn’t matter if you don’t use this rule.)
– Exploit other people’s human emotions by learning from them. (people who are constant in their mistakes can not gain success and earn money)
– Be disciplined, make plans, follow strategies, apply mathematical and money management principles!
– Run only profitable trades and try to cut losses as fast as possible!
– Don’t use rumors and advice unless you are certain of their authenticity and quality!
To be successful you have to think independently of the majority and stick out from the crowd. Just like in any trading field, these principles have to be followed in Currency trading also. Gaining money should be easy on the Forex Market, but not that easy because some have to win and some have to loose. Currency trading is much safer than other trading methods, but if you want to have an edge over other competitors than try to be wise and research first, study other people’s behavior and choose from them only the best. “When everybody thinks alike, everybody is likely to be wrong”. (Gann)