Forex Trading - The High Cost of Your Fears
By Brian McAboy
Traders lose more money in day trading Forex currency due to emotions than anything else. You see it all the time. Every time you hesitate to make the right move, it costs you. Staying in a trade longer than you should and miss taking the profits off the table, you”re just denying yourself those profits. Every time you get out of a winner too early and cut your profits short is one more piece of proof that your emotions can be very costly.
In day trading Forex currency, “Once bitten, twice shy” is felt by everyone. The source of many emotional problems in day trading Forex currency is fear. Because you”ve been bitten before, there’’s the fear that it will occur again. Hesitation comes from that fear, as well as tthe staying in your trade too long and getting out too soon.
Other emotions are working on you too, such as greed, hope, despair, guilt, shame, anxiety, confusion, anger, pride, plus a whole slew of other feelings. Revenge is a big one too. It’’s common when you experience a regrettable loss that has you reeling from the pain, revenge often comes to mind. You want to get even with the markets and reclaim your capital. It’’s a natural human response.
Day trading Forex currency runs opposite to all that we learned growing up and to our nature as human beings. Our emotions are part of a survival mechanism that in trading, tend to work against you. It’’s not natural for you to step into a high-risk situation, experience pain (take losses) a fair percentage of the time, just accept it, and then ask for more. Self-preservation is our natural response. In day trading Forex currency, you”re trying to deal with the elusive nature of the markets, in addition to trying to assimilate a huge body of knowledge along the way..
Gaining control over your emotions, or at least to the point that they don”t interfere with your decision-making and to act without hesitation at the right time requires more than simple determination. It doesn”t work to try to ”force” discipline or to fight your feelings.
Fear diminishes as you replace it with confidence, and as your confidence builds, you”ll find that the discipline to do the right thing at the right time becomes easy. Remember though, forcing it won”t work. Certain skills must be developed to make this happen, especially Emotional Intelligence.
That’’s quite a challenge, as most people that get into trading have never done anything like it before. In any occupation, to be good at it and have the confidence you need, and like all new experiences, you have to develop the skills for day trading Forex currency. Training is usually a given when you start a new job. The company wants you to do well, so they make sure that you have the skills you”ll need. Most traders never get that opportunity though. The toughest way to learn any occupation is to be self-trained and by simply being thrown to the wolves, and this is particularly true in day trading Forex currency.
In the past, about the best you could do was to buy a book on ”Trading Psychology”, which is a conceptual approach to trading, and many books on the subject were written by psychologists, not traders. Emotional Intelligence is not a concept though, it is an ability and a skill. Reading only gives you knowledge. Skills come through actions. Your skill grows and your paradigms shift from experience, not from simply acquiring new knowledge.
Training on how to become a successful trader has been largely non-existent until now. The trading system gets at least 90% of the focus with most training that is currently available, not how to develop one’’s Emotional Intelligence as a trader.
About The Author
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