If you’ve ever played poker, you’ll know the high of going ‘all in’. Your heart is racing like there’s no tomorrow, and you’re hoping and praying the cards will go your way.
It’s the thrill of knowing you can double your money in a few moments and also knowing it can all disappear if things don’t go your way.
This type of excitement shouldn’t be part of your trading, FSP Invest explain in The Ultimate Secrets to Forex Trading
If you are a thrill seeker, go skydiving. If you’re a gambler, go to a casino. If you’re afraid to lose money, open a savings account.
Successful forex traders don’t let their emotions interfere with trading. Too often, people let fear, greed, or pride get in the way of becoming a consistently profitable trader.
The effect of fear on forex trading
Fear will prevent you from making the right trades and make you lose out on immense opportunities. Fear stems from lack of knowledge and proper education. You’re afraid because you can’t see if the trade is the right trade. Once you acquire knowledge and training, you begin to trust your decisions because you base them on facts and not emotion.
The negative effect of greed
Greed is another emotion you must overcome to be successful.
Many beginners experience ‘beginners luck’, and come out on top on their first few trades. Then they start to believe they should have traded with more at risk so their profits will be larger.
On the next trade, they trade with a large sum of money and lose it all.
Logic will dictate they should trade with a smaller amount the next time around since they have less capital now. Unfortunately, humans are not logical creatures. Greed takes over, and you start believing that if you put in more money, you’ll make up for the lost amount, and come out on top.
Sadly, this cycle can only continue until you’re completely out of money.
Pride comes before a forex fall
Pride will take you nowhere fast in forex trading. Pride will prevent you from learning.
When you feel like you have nothing left to learn, that’s when you’ll start losing money. Pride is the toughest stumbling block to overcome for some because it’s an ingrained part of their personality.
Everyone can all learn from the hugely successful forex traders who still research and read to maintain their success. You can still be happy when trades go your way, and sad when they don’t.
However, these emotions should not play any part when making your decision for the next trade. You must base your decisions on logic and facts, not emotions.
There you have it, why fear, greed and pride will get in the way of you becoming a profitable trader.