Why is psychology in trading so important and its non-observance entails great risks? Knowing the basic criteria for developing emotional stability, you will reduce risks to a minimum by increasing the efficiency of trading.
Probably many have already guessed (of those who have tried to actually trade) that trading on 80% consists of psychology.
How emotionally stable you are and how stable your psyche is to financial transactions - the outcome of your trading as a whole depends on this.
If you are afraid for every penny, chase after a freebie and don’t want to invest money – Forex is not for you!
And those who want to invest correctly and profitably for themselves, welcome!
Now we will look at the important psychological aspects that you will certainly be exposed to while trading. And if you have a correct picture of the financial market, then you will be able to adequately think, analyze charts and take the right actions.
Basic psychological rules
- Better not sit down at the monitor in a bad mood. If you are not balanced and feel “nervous” behind you, you will not be able to adequately perceive the trading situation.
- If you have no interest in the trading process itself, but only a desire to “make money as soon as possible”, you will most likely lose your deposit. it is desirable that trading gives you pleasure and you like to do it. As soon as interest in such an activity disappears, it is better to immediately leave the computer or do something else.
- Do not sit at the monitor for days, be sure to leave at least 15 minutes every hour, so you will “unload”. You can watch a movie to relax or go for a walk. Relaxing is a must. Why? If you constantly contemplate charts and fiddle with indicator settings in the hope of inventing a “grail”, the overall picture will start to “get boring” and you will start to lose vigilance and you can miss the main points.
- Don't reinvent the wheel. Everything complex is in the simple. The most working trading strategies are always the simplest. The more complex the strategy, the worse you will follow its rules, you will constantly get confused.
- Always experiment on a demo account first, and only then try on a real one.
- Behind the workplace during the analysis, you should not be distracted by anything. Music playing loudly, a child screaming or someone doing repairs nearby - all these are interferences that will simply confuse you. Look for and prepare in advance a quiet place where you can sit comfortably and do everything.
- Always analyze with a fresh mind. The best time is of course the morning or after any other business that does not concern the computer.
- Try to turn off the emotional background and not react negatively to losing trades or positively to profitable trades, you just need to analyze.
- Never "think" where the price will go. Follow the rules of your strategy, which must first be worked out on a Demo account.
- In analysis, as a rule, the first decision is most often the correct one. You need to work out for yourself the installation - "I never fix it." We opened a deal - that's it, let it work out, you will see the result and already there it will be possible to draw conclusions.
What is the most important thing in trading?
Remember, in trading, not only experience is important (you can earn without experience), the main thing is how stress-resistant you are and what your attitude to money is.
There is a good psychological attitude that helps to increase your capital without risks.
When looking at your trading account, treat it not as money, but simply as “Numbers” that you need to increase. And, of course, you must follow money management rules (risks per transaction).
If during trading you constantly think about money, you will be afraid of losing it and, accordingly, you will begin to take wrong actions, not considered.
Successful trading and passing trend!