Trader's psyche. In the clutches of emotions ...

Psychology in the Forex market plays an extremely important role. By investing our own funds, we make a number of decisions that will determine our success or failure. Selection of the system, capital management, market in which we will invest, and then a number of details such as the place of opening the position, closing, level of determination SL, TP, the size of TS and everything else will affect the profit of the transaction. All of this creates a psychological burden that makes it difficult for us to make good decisions. There is also the question of the possibility of earning money and losing your own money. Such a mix of factors causes that investors (mainly beginners) often fall into the clutches of emotions ...

Greed

Why do we invest in financial markets? The goal depends on the investor himself. Some hedge against risk, others animate the market, while for retailers it is usually just a desire to make a profit. If you do not want to be moderate and do not count on market realities, you can say that we are dealing with greed. Appetite grows as you eat, so it is very fatal to achieve a large profit at the beginning of the adventure with the Forex market. A large financial leverage, a large transactional volume in relation to resources, a bit of luck and that's why we earn 100% in a month. The next step is to multiply 100% over 12 for months to see how much we'll get every year. It's best to use the compound percentage, so you will not earn 1200% over 400 000%. We are becoming more and more greedy, we want more and more, forgetting about risk control and our little experience. We spend money in our heads that we have not yet earned.

READ NECESSARY: How to deal with a bad run in trading?

I don't think there is a need to write how it ends… Control your greed, control your risks and be moderate. Better smaller stable profit than a one-time "golden shot". You can gain 3000% but only lose 100%.

Fear and uncertainty

One of the most destructive and paralyzing emotions that affect traders and their investment accounts. Some people experience a paralyzing fear of opening a position. Recalling previous failures, they immediately think that the next transaction will also fail. If you don't believe in your system and / or skills, what are you doing there? If you don't feel strong enough to open a deal and can't fight it, you better hold off. Opening a position is only half the way - it still needs to be monitored and closed. If you have doubts when opening it, it doesn't bode well for the rest of the activities.

You must be aware that any investment involves risk. Risk always causes some uncertainty or anxiety, however, it should be less the more we have prepared for the transaction. Do you calculate risk, do you have a proven system? Master bad emotions and do your part. Gain confidence in your own decisions.

Forex psychology and euphoria

Imagine a situation that for a week of operating on your investment account, even in accordance with the capital management system and principles, you record 30 transactions in a row in a plus. You earn 25% of your account value, the lights on the platform are green, you can't see any ugly red SL. You feel like the king of the world. You think in terms of "what else can I earn here?", Forgetting that there is such a thing as a loss.

Contrary to appearances, also positive emotions can have a disastrous effect for the investor and the state of his account. Achieving a series of profitable positions may lead to overconfidence, which translates into euphoria, and from euphoria already quite close to a series of failures. This state often interferes with the process of analytical and rational thinking. You feel so good that you only consider the positive aspects of investing. You think you have control over the entire market when in reality it will never be like that.

READ ALSO: Interview with Sylwia Dobosz, Forex trader

Always have respect for the market and be aware of the risks of investing on it.

Hope

It is said that hope is the last to die. In fact, this is also the case in the financial markets. First, some funds are lost, then all funds, and finally, hope disappears ... This is how you can briefly present the adventure of the Forex market and an investor who is driven by hope.

The quickest recipe for bankruptcy is to combine not using the Stop Loss and living hoping that you might succeed. It may be so once or twice, but we will be disappointed in the long term. Success must be helped. If, after opening a position, you wait until it turns out to be positive, and then the loss begins to increase and increase, until it is finally so large that you say that it is not profitable to close it and maybe it will bounce back soon, know that it will happen will not succeed.

If there are no clear indications from the technical or fundamental analysis, and the calculation of probability suggests that the chances of success of a given transaction are slim, let's accept this fact. Let us not fight it on the basis of emotions. There is nothing to argue with the market. If you don't have multi-million capital, you don't really have anything to say and you just have to adapt - "Adopt or die".