Forex Trading Requires Emotion Control

Forex Trading Requires Emotion Control

Forex trading is increasingly popular thanks to internet progress.Almost all walks of life know about this business. Starting from entrepreneurs, employees, students and even internet cafe operators at least know that there is a form of trading called forex trading.

Exceptional potential makes many people interested in trying. Unfortunately, many do not realize that trading is not only about the level of intelligence, but also about how to control the mind; in this case: emotion.

Expectations are too high

Beginners usually start trying trading using a demo account. Often demo accounts run well; the beginner can produce big “virtual profits”. That fact made him think, “Oh, it turns out trading is easy. I can get thousands of dollars in just a few hours. Why do I not know from before? “

Based on the success of his demo account , a beginner usually has very high expectations. Her self-confidence became too big and this feeling was very dangerous for novice novice traders.

When a beginner starts trading on a real account, it means that he has put his capital ( real money ) face to face with the market. He will soon realize that forex trading turns out to be more complex than he imagined. When the safety of money is truly threatened, it will feel real stress. His achievements in the demo account seemed meaningless.Conditions like this often lead a novice trader to the valley of despair.

Vs. training Real

Entering the real trading world from the demo trading stage is actually the most difficult stage in the world of trading. That’s when a trader really tested his ability in terms of psychology.

In demo trading , there is no financial risk that can actually occur. The losses experienced in the demo are only “virtual” losses. There is no emotional involvement there. But when it has entered real trading , when financial risk ( loss ) can actually occur, it is very likely that a trader loses focus. Even worse, loss of focus leads to loss of objectivity. He was no longer able to make decisions based on what he had learned and trained in the demo account .

Beware of emotions taking over the mind

It is clear that emotions can take over the mind of a trader. Uncontrolled emotions are the biggest enemy of traders, which can lead to poor judgment due to loss of objectivity in addressing market changes. This can lead to swelling losses suffered.

Some emotions that often interfere with a trader ‘s concentration and consistency include greed, fear which in turn paralyzes the ability to make objective decisions.

Greed

Greed can make a trader maintain the position (transaction) for too long in the hope that the price will continue to move according to his wishes.Even when prices turn in the opposite direction of his expectations, he will continue to hope things will become what he wants.

This is what often underlies the loss of profits obtained from positions, even turning into losses. To avoid this, you must try to measure objectively where you should realize profits. It is true that the target must be as large as possible, but still there must be reasonable reasons.Return to your analysis, whether or not the position is worth maintaining. If from an analytical point of view it is time to close the position, close it.

Fear

Excessive fear tends to prevent a trader from opening a position, or it can also make him close his position too quickly.

If you are too afraid of risk or loss, you will often miss many good opportunities. When the fear of mastering, you will usually close your position even though the profits are still too small compared to the actual potential that is still large.

The way to overcome it – again – is to have a good trading plan , which has rules regarding when to enter and exit the market (trading system), as well as capital management rules and good risk management . A tested trading plan will give you peace of mind.

Control your emotions

However, a trader remains an imperfect human. That is why there is no perfection in forex trading . Even so, trading does not require perfection. What is needed is controlling risk and optimizing the opportunities that exist by running a trading plan well. For this reason, emotional control is absolutely necessary.

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