Psychology in Forex Trading

FoxyFoxy

Newbie
Dec 10, 2016
24
2
2
37
The psycholgical aspect of trading can be a real problem. Not setting a stop loss, revenge trading, over trading all these things are symptoms of how psychology can cause problems in trading. For me the key was to start demo trading and then use a real live account but with a tiny lot size of 0.01. I then increase the lot size a tiny bit at a time. it took about a year to get up to a decent stake size but it really helped with the mental aspect of trading
 

Brads

Active Trader
Jul 4, 2016
295
4
29
30
India
The only psychology that I follow is to keep down my nerves and also to learn through my trading mistakes which I tend to follow.
 

Andrew101

Active Trader
Oct 3, 2016
199
9
34
39
Manchester
Once you’ve over-leveraged your knowledge of trading and become overconfident, it’s only a matter of time until you start feeling the markets must come your way, even when they’re moving against you, or that it’s sensible to risk a large percentage of your account balance on a single uncertain position.
 

Andrew101

Active Trader
Oct 3, 2016
199
9
34
39
Manchester
“In a winning trade, the fear of losing will cause us to focus our attention on information that the market is going to take our profits away, compelling us to get out early. In a losing trade, we will focus our attention on just the opposite information – anything other than that which would indicate the trade is a loser.
 

Winjak

Active Trader
Sep 22, 2016
57
9
29
44
Jakarta
"The Psychology of Trading: Tools and Techniques for Minding the Markets" - this is the book that helps traders to notice important details which they didn't notice earlier
 

Hafizmd

Active Trader
Sep 22, 2016
77
5
29
38
Kuala Lumpur
"The Psychology of Trading: Tools and Techniques for Minding the Markets" - this is the book that helps traders to notice important details which they didn't notice earlier
I see that reviews on it are really good. Hm. I'll think of buying it.
 

FoxyFoxy

Newbie
Dec 10, 2016
24
2
2
37
Sounds like a good book but I have bought so many books and when I look back at it, I got almost nothing out of out most of them
 

jellyeb

Active Trader
Jun 10, 2015
248
11
29
Most webinars provide basic knowledge and trading strategies if you want something advanced you need to gather valuable info on forex forums and listen market experts to get clues on what details are important in trading.
 

Andrew101

Active Trader
Oct 3, 2016
199
9
34
39
Manchester
When we talk about psychology in forex trade, you have to have the attitude that if a trade loses, you can handle it without any problem and come back to do the next trade. You can’t let a losing trade get to you emotionally.
 

Andrew101

Active Trader
Oct 3, 2016
199
9
34
39
Manchester
The most effective or systematic path to discovering what you need to be successful in forex is to develop a winning attitude because it is an inherently creative process.
 

Alexfx79

Active Trader
Sep 22, 2016
376
20
39
40
Berlin
The most effective or systematic path to discovering what you need to be successful in forex is to develop a winning attitude because it is an inherently creative process.
Andrew, you have been posting so much here, why don't you gather all these tips in just one place? :)
 

myfxpt

Master Trader
Nov 13, 2012
395
50
74
58
Melbourne, Australia
gazfxsite.wixsite.com
just a thought from my deepest mind : its a bit irony when people said in search for consistency while trading, and had to control their emotional state to keep.
all I can say Trading psychology it's a myth, no one ever need this while having a proper trading plan, a result from endless research.
practically said this myth demand a total emotional control in order to beat the market itself. perhaps we can manage to it somehow, some at random trading day, so how we keep manage to it for whole years ? and for another year to come. the answer is, well-build trading plan. not just a peaceful state of mind.
How true! Emotions only affect our decision making when there is no formula on which to base our decisions. A trading plan (strategy), which I assume EVERYONE has, if followed according to its unique set of rules, eliminates emotions. If you have taken the time to test your strategy with a demo account, and IF you have gathered performance data that clearly defines what works in your strategy, and what does not, then you can have confidence in trading your strategy...even when it goes against you. For example, a win/lose ratio of 1 to 3, an average win trade of $100 and an average lose trade of $20, based on account performance over a period of time, tells you that your strategy can lose on 3 trades in a row and yet still make a profit (3 x $20 loss = $60 / 1 x $100 gain / Net $40 gain). What is there to get emotional about? Losses are stepping stones towards profit!

A strategy will comprise entry, exit, risk, and lot size rules, formulated based on past performance results. Performance data is continually collected allowing dynamic rule adjustments, i.e. stop-loss, risk factor, etc., so that a strategy remains in tune with the latest market dynamics. So you know precisely when to enter, how many lots to trade, and when to exit...no stress, no indecision, no emotional influences!
 

Mixtrader

Newbie
Dec 29, 2016
16
1
1
42
How true! Emotions only affect our decision making when there is no formula on which to base our decisions. A trading plan (strategy), which I assume EVERYONE has, if followed according to its unique set of rules, eliminates emotions. If you have taken the time to test your strategy with a demo account, and IF you have gathered performance data that clearly defines what works in your strategy, and what does not, then you can have confidence in trading your strategy...even when it goes against you. For example, a win/lose ratio of 1 to 3, an average win trade of $100 and an average lose trade of $20, based on account performance over a period of time, tells you that your strategy can lose on 3 trades in a row and yet still make a profit (3 x $20 loss = $60 / 1 x $100 gain / Net $40 gain). What is there to get emotional about? Losses are stepping stones towards profit!

A strategy will comprise entry, exit, risk, and lot size rules, formulated based on past performance results. Performance data is continually collected allowing dynamic rule adjustments, i.e. stop-loss, risk factor, etc., so that a strategy remains in tune with the latest market dynamics. So you know precisely when to enter, how many lots to trade, and when to exit...no stress, no indecision, no emotional influences!

Very good post. If you understand and believe in your strategy then emotions don't really come into it. A lot of people in trading go on about the psychology of trading but the real factor behind this is a bad strategy / understanding of the DD of ones strategy
 

darren greg

Trader
Feb 2, 2017
23
1
19
39
A trader requires a lot of skills to be successful in the forex markets. Trading psychology is one such aspect where you should have the ability to understand the fundamentals and effectively apply it with complete discipline. Another important aspect is to have full control on your emotions. To be a successful trader, you need to be financially as well as psychologically ready to bear the loss and avoid emotional trading.
 

Aadolf

Trader
Jan 26, 2017
60
3
24
45
As a trader, you do not need to lose confidence or be over-confident. When you lose confidence, you are fearful and that would have a negative impact, errors are made in the way yo trade. When you over-confident, you exaggerate your abilities and end up losing. So be balanced, have your emotions under control.
 

jameswilliam

Trader
Jan 31, 2017
32
1
7
33
All the things have just one solution a proper trading plan. In order to be consistent, efficient & trade emotion free nothing is more important than having a well defined plan. Psychology in trading comes in the form of emotions and controlling your emotions is very difficult as they are part of human and these cannot be totally eroded away. With due determination to follow the plan and not getting distracted can only help you to overcome your psychology and trade efficiently.