What is trading psychology?

Forex trading Psychology is the composition of all your emotional feelings towards the Forex market. 

These emotions can dictate success or failure in your trading journey

Your trading psychology deals with your emotions when entering and exiting trades.  Also how you react after having a large loss or draw down on your account.

What is Forex Trading Psychology.

Almost 95% of the traders still struggle with psychological emotions.

The truth is that all traders have faced the same things at a certain time in their trading career.

Most traders usually experience losses because of negative emotions that corrupt their minds and dictate their decision-making processes.

Such emotions include; fear, greed, overconfidence to mention but a few.

Trading psychology is commonly ignored because what traders care about is getting a system that can get them on top of their goals.

Knowing how to manage your emotions right is much more important than getting a system.

Trading is a game of psychology and only the toughest competitors survive. You either win or lose.

In other wards, Only those who are ready to stick to their trading discipline stay long in the game.

Emotions you should watch in yourself when trading

It always starts with greed, revenge, fear then regret.

If you get greedy, you will always find yourself taking only losses.

  The more attempts you make trying to get back on the market the larger the losses you take and soon you will be out of the game.

Due to so many large losses made because of the stupid decisions you took, fear gets to you.

In this case, you can’t stand more losses, so you will either take small profits or close trades early with a small loss.

In the end, after closing out your trades prematurely, they mature and actually go beyond your expected target profit. You now do not know what to do any more.

Confused as you are, stress engulfs you and you don’t know how to go about it.

Fortunately enough, there is a solution. You have to face your emotions!

This is what trading psychology is all about.

Over confidence is also another psychological emotion attained after attaining several wins in the market. These can result into big losses if not controlled.

Good news, is that you can learn to control these emotions if you know the triggers.

When you overcome your fears and greed, you will take a stop loss hit normally. You won’t be scared to enter trade as long as it qualifies to your trading rules.

First of all, do a self-study and find out how you react to the market when certain changes happen.

Find out how such emotions affect your decision-making process so that you can learn how to control them.

Trading with emotions leads to big losses because you don’t follow your trading plan. Trading with no plan is no different from gambling!

Relationship between Emotions and Losses

The illustration above is plain simple, the more emotions involved in your trading the more losses you will experience!

Trading psychology is worth considering in your trading career because with that perfect strategy you need discipline to profit from it consistently.

You need confidence, practice, patience and persistence.

Only when you master to overcome your emotions, you will be able to profit consistently.

Like we mentioned earlier, trading psychology is commonly driven by fear, greed, regret, hope and over confidence. 

Now, We shall go through each in detail so that we can learn how to deal with them while trading;