With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions. All one needs is a computer, an internet connection, and an account with a forex broker.

Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Read this Term trading, it is of paramount importance to maintain a level of discipline and not to let our emotions get the better of us.

Traders need to come to terms with who they are! Traders also should be aware of the fact that they will eventually experience different emotions. How we manage these emotions will affect our overall decision making and in terms of trading - profitability. Our mental state has a significant impact on how we behave and the decisions we make. In this piece, we will take a look at which emotions traders commonly experience, harnessing those emotions.

When thinking about our emotions in Forex Trading Forex Trading Forex trading is the buying and selling of foreign currencies with the aim of generating a profit. The value of currencies, especially floating currencies, fluctuate to varying degrees. This constant volatility of exchange rates opens the door for speculators to invest in a certain currency against another.

It goes without saying that forex trading is a very attractive market for not only banks and hedge funds, but even for the small individual trader, due to the low barriers for entry. One literally only needs a computer with an internet connection, and some money deposited with a forex broker. its exchange rate moves to 1. A lot of time and effort is needed to practice trading on demo and eventually on real accounts.

No doubt it takes dedication, discipline and patience, along with developing an edge to beat the market. That edge is gained by studying at least one of two fields, known as technical analysis and fundamental analysis. The former involves looking at currency charts, seeking out certain patterns using tools and software known as price action and indicators to help determine which way a particular forex pair may meander.

By extension, the latter involves focusing on the latest news reports and geopolitical situation of the countries involved. Forex trading is the buying and selling of foreign currencies with the aim of generating a profit. Read this Term , there are 2 stand out feelings that every trader will go through. Fear and greed. Fear affects traders decisions in that a trader will be less inclined to take any risk. When a trader opens a position, fear can make traders close positions early and often before hitting a target stop loss.

If a position has crept into profit, fear can make us close a position too early as to not lose any profit. Holding on to a position for a little longer could result in hitting a target and earning more profit. When a position is in loss Generally, fear does not allow us to behave properly.

Fear can ruin everything! Not only in trading but in real life too. Fear of losing trades - many traders fear having losing trades. They don't want them. They hate it when a stop-loss is triggered and their account balance shrinks slightly, especially if they are on a losing streak and have had consecutive losing trades already.

This fear can lead traders to stop trading and miss profitable trading opportunities. Having losing trades is part of trading though. It is inevitable. Fear of losing profits - after having a decent winning trade and showing a healthy profit, some trades are then struck with fear as they don't want to risk what they have made and potentially lose their gain. Some traders may think that they are just being sensible by ring-fencing their earnings, but the reality is they have become emotionally attached to their profits and fear losing them.

Any trading decision that is based on emotion - no matter how sensible it may seem - qualifies as emotional trading. End of. Another example of this fear is not letting positions run long enough. Fear of missing out FOMO - some traders don't want to miss out on the next big money making opportunity, so they take trades based on this fear. They think to themselves, "I don't want to miss out on the next bitcoin rally" or "I don't want to miss the next potential US Dollar move".

As they take trades based on these thoughts, they are simply trading their emotions.. Sound familiar? Greed - being greedy in Forex trading is not as common as being fearful. Most traders than suffer from greed usually let their positions run for too long, in the hoping of making even bigger returns. This eventually backfires though, just like all emotional trading does!

Traders that are driven by greed also tend to push strategies and time in the market to the max. Instead of being happy with today's returns, they continue to trade to the point that they are over-trading. This often leads to unnecessary losses and burnout. Boredom - too many traders enter the industry with wrong expectations.

They want excitement, quick returns and a Lamborghini! What they don't realise is that the most successful traders and most reliable trading strategies wait for the right trading opportunities. Many traders get bored of waiting for these trading opportunities, so they decide to make their own "opportunities" Guess what? This fails. Because the trades were emotional, not logical. Impatience - this can be the root of all your trading emotions Because of your lack of patience in waiting for a trade, you become fearful and enter a trade based on emotion.

Or, because of your lack of patience in your account growth or performance, you become greedy and risk far too much per trade. Not willing to be patient is the key to trading failure. Impatience in trading is closely followed by boredom, greed, fear and other negative emotions. In fact, a lot of these emotions are intertwined and closely related.

Please note - I think it's important to note here that there are positive trading emotions. Such as, satisfaction, ecstasy, excitement, enjoyment and pride. These emotions should not be eradicated or looked down on. Becoming an emotionally disciplined trader is not about managing all your emotions - good and bad - it's about controlling the negative emotions only! These are the emotional demons that seek to ruin you as a trader".

Because of trading emotions, becoming a market wizard and beating the market is not easy. Whether you plan on trading stocks, Forex or commodities, you are going to face emotional and psychological demons.

Watching traders overcome these trading challenges is both inspiring and exciting! Unfortunately, many traders don't overcome them, even with the best trading strategies. What's worse is that they continually fall into the same emotional mistakes and fail at the same psychological obstacles. It's true that developing emotional discipline and learning how to manage your trading emotions takes time. Many traders have had plenty of time though and are still falling short of reaching the land of profitable trading Many traders will let fear, greed, boredom or impatience beat them every time.

Many Forex traders are stuck in an emotional cycle, which I call 'The Losers Cycle'. The cycle is like this Step 1. Find, create or learn a trading strategy. Step 2. Trade the strategy. Step 3. Become emotional. Step 4. Give up. Step 5. Go back to step 1 and repeat. Almost all losing traders are in this cycle. They are the strategy hoppers. They are the ones that blame the strategy or the broker for their constant losses and blown trading accounts. They are the traders that fail over and over again because they constantly become victim of their own emotions - they ruin it for themselves!

If they had an edge, it is gone due to their lack of emotional discipline. But, guess what? There is hope! These people can change. They can become successful. If you are stuck in an emotional trading cycle, then keep reading So far I have covered the what, why and how of trading psychology and trading emotion.

Time for the main show How do we control our Forex trading emotions and - in the process - become successful The first thing to mention is that there is no key to entirely eliminating trading emotions. They are part of you and will always be around - even after 10 years of trading I still face negative emotions when trading! The key is to reduce the intensity of these emotions and to do your best to manage them. Below are my tips on reducing trading emotions Reduce your trading capital - there is an undeniable emotional attachment to money, especially when it comes to trading.

This emotional attachment intensifies if you are trading with more money than you are comfortable losing or if you are trading with money that you cannot afford to lose. Why put yourself through so much pain? Simply just reduce your trading capital to the point that you feel more comfortable and actually start enjoying trading again. If you are not enjoying trading, then why do it?! If you are not willing to reduce your trading capital, I suggest you ask yourself why.

You may find that you are being emotional and not thinking logically! Ask yourself, 'if I were to lose my trading account today, how would I feel? If the answer is emotional, then you are simply trading with too much capital. Reduce your position sizing - risking too much per trade is another way to crank up those trading emotions. A single trade or a series of trades should never be make or break.

Risking anywhere between 0. Generally, when someone is risking too much per trade, they end-up glued to their charts and worried about the outcome of the position. If this is you, then reduce your position sizing! Reducing your trading capital and position sizing will really help reduce stress and other negative trading emotions. Focus on percentage returns, rather than monetary gain - as already mentioned, there is an undeniable emotional attachment to money.

Because of this, it's so much better to focus on your percentage return than monetary return. Looking at performance by percentage is also much more professional and will help you gauge how much you will need to actually make a decent income through trading. The latter tells nothing. Stick with the strategy and don't expect to make money - too many traders value their success by the amount of money they have made. Once again, focusing on the cash side of things leads to more intense emotions.

Instead of focusing on the money side of trading, focus on your strategy - the thing that gives you an edge. Your success should be valued in your ability to stick with your trading strategy, not how much money you make or lose. Funnily enough, sticking to your strategy will lead to greater monetary returns. So if you really want to make trading work for you, then put your energy into following your strategy rather than the money you are making.

Think longer-term - this is a BIG one How often do you check your account balance? How often do you review your performance? Most unsuccessful traders check these things on a daily basis. This mindset is totally wrong and extremely unprofessional. Profitable traders focus on the long-term. They are interested in their performance on a quarterly and yearly basis - not daily or weekly. Do yourself a big favour. Ease the pressure on yourself by trying to be profitable this year, not this week!

Make trading a money making hobby or 2nd income - another way to reduce trading pressure is to make trading a hobby or a small 2nd income. Trying to trade for a living adds unnecessary pressure and emotion to newer traders. It is a sure way to make trading become stressful. Keep busy - staring at the charts is both a waste of time and an emotional roller coaster. It might be a novelty at first but you will soon realise that it will increase your trading emotions, especially if you have open positions.

I keep myself very busy throughout the day; running love-the-pips, being a technical analyst for a Forex broker, writing blog posts, playing video games, watching YouTube, etc. These things keep my mind occupied and distracted from the charts and my floating profit and loss.

Be committed to your analysis and trading strategies but let yourself become distracted with other things once trades are open. Give time to the things that give you an edge, don't give your time to emotional activities.

Consider longer-term trading - day trading is far more emotional than swing trading. This doesn't mean that you shouldn't day trade, it just means that you are making trading psychologically harder for yourself. I personally believe that all new traders should become profitable swing traders before moving into day trading.

There are 2 reasons why you will fail to become a successful trader; trading without a strategy and trading your emotions On this page, I will share everything I know about controlling your trading emotions, including my best tips on how to better manage your emotions when trading.

I have been trading for over a decade and consider myself a trading psychology expert! The challenges of trading psychology and a lack of emotional discipline are to blame for blown trading accounts and for traders losing money. A profitable trader is an emotionally disciplined trader Many of you reading this have a dream - a dream to become a trader!

Unfortunately for you, the road to becoming a successful trader is not easy but then nor is anything worth achieving in life! On your Forex trading journey there are a number of obstacles - some small, some large - that block the way to reaching your journeys end; the land of profitable trading! With some time and effort, many of these obstacles are easy to remove, but there is one obstacle in particular that proves extremely difficult - almost impossible - to even wobble The obstacle of trading emotion!

The emotional and psychological challenges of trading are felt by all. In fact, most of you reading this article are not currently profitable because of these challenges! Whenever I meet with a new student, one of the first questions I ask is, 'why are you currently not profitable in trading? The answer is usually connected to a lack of trading strategy or a lack of emotional discipline.

Can you relate to this? Have you felt the pull of negative emotions when you've been trading? Keep reading, this post is going to really help The psychology involved in trading Forex, stocks, futures, or any other financial market, is extremely interesting.

A lot of the trading emotions you feel and the psychological challenges you face are founded on 2 things Expectation mindset. Whenever our expectations are not met, it is natural for us to feel disappointed. When similar or the same expectations are not met continually, it is natural for that disappointment to grow deeper and stronger, to the point that the disappointment develops into discouragement, resentment or frustration.

In fact, the root of all your disappointments, discouragements and frustrations is expectation. There will be more about this later. Impatience, especially when dealing with monetary gain, is a key component to the psychological and emotional structure of trading.

The inability to wait for a decent return can be the foundation of all your emotional challenges. Don't believe me? Read the story below The host of a famous TV documentary stood in the centre of a busy city. He had a handful of cash. He stopped people randomly and asked them the following question Of course, all who were asked replied with the answer, ' dollars'. The TV host then asked a 2nd question Almost all those that were asked replied, ' dollars now! What a thought-provoking experience!

If you give it some thought, you will realise that these people were speaking and making decisions based on emotion rather than logic.

It makes total sense to accept the larger offer! But the fear of not getting the money in 30 days time, or the instant gratification of having the money now, leads the individual to choose the most irrational answer. Unfortunately, this is why most people fail at trading- they let their emotions dictate their decisions, rather than logic dictate their decisions! It makes total sense to delay the gift for a short time, in order to receive a greater gift. Most people acted on their instant gratification though - they chose to forgo something better, simply because they were not willing to wait a month!

I thought I was a disciplined man until I became a trader! You will learn so much about yourself as you learn to trade. Most of all, you will learn how emotionally weak you are. Weaknesses can become strengths though - there is hope - you can do this!

Trading emotion can reveal itself in many ways. For some Forex traders, they become fearful. Others become stressed and anxious. Soon I will teach you how to have greater control over these negative emotions and how you can manage these feelings.

For now though, let's focus on identifying some of the most common trading emotions and how they can impact your trading Fear - this emotion is the most common amongst traders. It can crystallise itself in many ways Fear of losing trades - many traders fear having losing trades. They don't want them. They hate it when a stop-loss is triggered and their account balance shrinks slightly, especially if they are on a losing streak and have had consecutive losing trades already.

This fear can lead traders to stop trading and miss profitable trading opportunities. Having losing trades is part of trading though. It is inevitable. Fear of losing profits - after having a decent winning trade and showing a healthy profit, some trades are then struck with fear as they don't want to risk what they have made and potentially lose their gain. Some traders may think that they are just being sensible by ring-fencing their earnings, but the reality is they have become emotionally attached to their profits and fear losing them.

Any trading decision that is based on emotion - no matter how sensible it may seem - qualifies as emotional trading. End of. Another example of this fear is not letting positions run long enough. Fear of missing out FOMO - some traders don't want to miss out on the next big money making opportunity, so they take trades based on this fear.

They think to themselves, "I don't want to miss out on the next bitcoin rally" or "I don't want to miss the next potential US Dollar move". As they take trades based on these thoughts, they are simply trading their emotions.. Sound familiar? Greed - being greedy in Forex trading is not as common as being fearful. Most traders than suffer from greed usually let their positions run for too long, in the hoping of making even bigger returns.

This eventually backfires though, just like all emotional trading does! Traders that are driven by greed also tend to push strategies and time in the market to the max. Instead of being happy with today's returns, they continue to trade to the point that they are over-trading. This often leads to unnecessary losses and burnout. Boredom - too many traders enter the industry with wrong expectations.

They want excitement, quick returns and a Lamborghini! What they don't realise is that the most successful traders and most reliable trading strategies wait for the right trading opportunities.

Many traders get bored of waiting for these trading opportunities, so they decide to make their own "opportunities" Guess what? This fails. Because the trades were emotional, not logical. Impatience - this can be the root of all your trading emotions Because of your lack of patience in waiting for a trade, you become fearful and enter a trade based on emotion. Or, because of your lack of patience in your account growth or performance, you become greedy and risk far too much per trade.

Not willing to be patient is the key to trading failure. Impatience in trading is closely followed by boredom, greed, fear and other negative emotions. In fact, a lot of these emotions are intertwined and closely related.

Please note - I think it's important to note here that there are positive trading emotions. Such as, satisfaction, ecstasy, excitement, enjoyment and pride. These emotions should not be eradicated or looked down on. Becoming an emotionally disciplined trader is not about managing all your emotions - good and bad - it's about controlling the negative emotions only! These are the emotional demons that seek to ruin you as a trader".

Because of trading emotions, becoming a market wizard and beating the market is not easy. Whether you plan on trading stocks, Forex or commodities, you are going to face emotional and psychological demons. Watching traders overcome these trading challenges is both inspiring and exciting! Unfortunately, many traders don't overcome them, even with the best trading strategies. What's worse is that they continually fall into the same emotional mistakes and fail at the same psychological obstacles.

It's true that developing emotional discipline and learning how to manage your trading emotions takes time. Many traders have had plenty of time though and are still falling short of reaching the land of profitable trading Many traders will let fear, greed, boredom or impatience beat them every time.

When thinking about our emotions in Forex Trading Forex Trading Forex trading is the buying and selling of foreign currencies with the aim of generating a profit. Price goes to 1. The former involves looking at currency charts, seeking out certain patterns using tools and software known as price action and indicators to help determine which way a particular forex pair may meander. LATEST TRADING ANALYSIS. The main two fields of trading are known as technical analysis and fundamental analysis.

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