Five Common Trading Mistakes in Forex
When I first started out trading twenty years ago, I made a lot of mistakes. I Learned from those mistakes the most important lessons in my
trading career. When trading manually, emotions play a big role in your success story. Experience taught me that I could not possibly win in
the market if I allowed emotion to influence my decisions. I had made my own fair share of mistakes, but I had learned from my errors and turned
them to my advantage. After all, The Markets are simply human emotion reflected in dollars.
Here are five common emotional mistakes that both new and experienced traders make:
1. Fear
That is one of the two most frequently talked about emotions in trading. Fear manifests itself in a number of ways in trading and can be the cause
of many trading mistakes. The fear of making a loss leads traders to delay the realization of a loss, with the hope of turning it around, which
leads to a greater loss later on. Also, the fear of not realizing profits in a winning trade leads traders to close their positions too early.
2. Greed
That kind of emotions are supposed to be good, but when we look at the hard facts. Greed often causes a number of impulsive trading decisions that
should be avoided. Traders who are influenced by greed often don’t adhere to sound risk and money management principles. Greed also
reinforces the gambling mindset which describes trading without set rules and based on impulsive decisions.
3. Hope
Or, trading based on hope and luck. Hope and greed often come hand in hand. Traders who are in a losing position often show signs of hope, when
they delay the realization of a loss and give a trade more room to breathe. Another example of hope is when traders try to make up for past losses
and then enter a trade with a position that is too big and not according to their rules, saying to himself "This time will be different".
4. Anxiety
When you are overly anxious during a trade, it is often a sign that your position is too big, you broke your rules or that you shouldn’t be in that
trade. Keeping track of your anxiety level and asking yourself why you feel anxious or excited can often help you get out of trades where you
shouldn’t be in the first place.
Anxious traders have bad health habits, such as excessive smoking and sleep disturbances, which badly affect their health.
5.
Boredom
Many traders lose their enthusiasm with the passage of time, which may cause them to be inactive, which in turn may lead to their plan not being
properly followed and expose themselves to big losses. Traders who are bored also often lack focus.
When a trader misses a trade because s/he weren’t paying attention, browsing the internet or doing something else is a sign that your focus is
not where it should be.
Because losing focus may mean a lot of losses, large investment banks give their employees leave when one of them achieves a specific goal. They
realize the amount of mental stress caused by circulation in the financial markets and what may be caused by the dispersion that may turn
things upside down.
There is no doubt that psychological discipline plays a major role in achieving the successful trader of his goals.
Therefore, it is important for the trader to record his diariesand write about his psychological problems and the way he
depend on to overcome them.
Human feelings are a double-edged sword.Therefore, speculators have to develop their sense of danger and their ability to seize good
opportunities.
