Psychology in Forex Trading

Discussion in 'General Forex Discussion' started by Rambo35, Sep 2, 2014.

  1. FoxyFoxy

    FoxyFoxy Newbie

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    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
     
  2. Brads

    Brads Active Trader

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    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.
     
  3. Andrew101

    Andrew101 Active Trader

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    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.
     
  4. Andrew101

    Andrew101 Active Trader

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    “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.
     
  5. Winjak

    Winjak Active Trader

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    "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
     
  6. Hafizmd

    Hafizmd Active Trader

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    I see that reviews on it are really good. Hm. I'll think of buying it.
     
  7. FoxyFoxy

    FoxyFoxy Newbie

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    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
     
  8. Alexfx79

    Alexfx79 Active Trader

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    So, where do you get your knowledge? From webinars?
     
  9. jellyeb

    jellyeb Active Trader

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    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.
     
  10. Andrew101

    Andrew101 Active Trader

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    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.
     
  11. Andrew101

    Andrew101 Active Trader

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    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.
     
  12. Alexfx79

    Alexfx79 Active Trader

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    Andrew, you have been posting so much here, why don't you gather all these tips in just one place? :)
     
  13. Andrew101

    Andrew101 Active Trader

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    I do not think it is possible to say all you know in a day, hence the reason I post here at different times.
     
  14. Alexfx79

    Alexfx79 Active Trader

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    I understand, but keep in mind this idea ;)
     
  15. Andrew101

    Andrew101 Active Trader

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    Thank you
     
  16. myfxpt

    myfxpt Master Trader

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    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!
     
  17. Mixtrader

    Mixtrader Newbie

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    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
     
  18. darren greg

    darren greg Trader

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    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.
     
  19. Aadolf

    Aadolf Trader

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    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.
     
  20. jameswilliam

    jameswilliam Trader

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    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.
     

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