Forex Market Psychology

12. Not deepen the pit

Written by forex

Bill today is a bad day. He lost 1000 $. He thinks: “I can’t finish the day with a minus $ 1,000. I’ll try to return the money until the end of the day.” He continues to trade, despite the fact that his plans had failed, he feels that stress is growing, that he was not himself.

He makes several mistakes in a row and lose $ 5,000 more. His bill suffered a serious blow. Bill realizes that he would benefit financially if he stood aside and regained his composure before continuing with the trade. Instead, he dug a deeper hole than you can afford, and get out of it will be very hard. Sound familiar? Many traders are afraid to accept constraints. Instead of having to look facts in the face, they continue to trade, despite serious losses. Successful traders, on the contrary, constantly in control of your mood, thinking, and experience. If any of these factors is not right, they take a break. For long-term success it is vital to develop a plan of self-control. Monitor your mood in General and emotions in particular. When You don’t feel fine, stop to trade.

Systematically control your mood mandatory. Some traders offer you to evaluate the mood before the opening of the market on a 10-Tabellini scale, from full pessimism (1) to energetic optimism (10). If they don’t rate yourself 8 or above, then take a day off. They rest, relax and energize to return to the market.

In addition to assessing your General mood, it is also important to identify the feeling of regret. Making a number of losing trades, we are sorry about this. Regret is a powerful emotion; it is often stronger than fear and greed. Traders should make every effort to avoid regret. The sense of loss compels us to admit that we were wrong. It makes us feel guilty. We dive into scenarios, “if”: “If I did X or Y, I wouldn’t have lost”. Regret makes us feel uncomfortable. The easiest way to avoid regret is to deny that You made the mistake of believing that you can reclaim all that lost. The problem with leaving regret is that You take your attention away from the problem. You do not notice that something is wrong. You will not be able to see what has changed fundamental factors, or You’ve changed psychologically, or changed market conditions. In any case, it is better to stand aside than to continue trading. When You received a series of loss that You consider unfair, You will feel anger; You will want to take revenge on the market. When You feel these emotions, rather, it is a way of avoiding subsequent feelings of regret due to making losses. It is vital to stop trading at this point. You lost objectivity and, most likely, begin to trade impulsive, unable to concentrate on the market. And related emotion – fear. When You are afraid of the consequences of losing money, You also avoid the regret. It is better to stop trading, regain our composure and start working again with fresh strength, maybe the next day.

You must take proactive steps to minimize the feeling of regret. Neutralize these s, by controlling your thoughts. When someone is sorry, he usually thinks: “I should have done X, I’m a bad person, not just do X”. The truth, however, is that markets are unpredictable. You can’t blame yourself in hindsight. And if You lost money, because it is not clearly defined trade plan or didn’t adhere to it, sorry not much help to You. It can be useful when you need a little push yourself, but much more useful to see a more positive perspective and think: “trading requires practice; the more I practice, the more I will develop the discipline needed to be a profitable trader”.

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