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Apr 3
6.1 Trading Psychology

TRADING PSYCHOLOGY: MISTAKES IN A TRADING ENVIRONMENT

 

 

One of the most neglected subjects regarding forex trading is forex trading psychology. When you are aware of all the psychological factors that deal with every forex trading decision will put the chances of success in your favor.
There are many traders who spend days, months and years trying to find the correct forex trading system. But having a forex trading system is one of the parts of a huge game. Although having a forex trading system is a significant part that suits the trader, it is as significant as having a cash management plan, or to know the psychological barriers that may affect the trader’s judgment. To be successful in forex trading business, it is important to have equilibrium between all significant aspect of forex trading.
In the forex trading environment, when the trade is lost. What is the very first idea that comes into our mind? It could possible be, “There must be something wrong with my forex trading system”, or “I knew it, I shouldn’t have taken this trade” (although my forex trading system signaled it). Sometimes we have concentrated little more in order to understand the nature of our mistake, and then develop our strategy.
While trading the forex trading market and other markets, only 5% of traders achieve the final objective to be coherent in gains. The remarkable thing is that only small difference between this 5% of traders and the remainder of them. The highest 5% increase from forex trading mistakes, by all the forex trading mistakes they learn a precious lesson by each forex trading mistake they made. In their minds deep inside, a forex trading mistake is another opportunity to work harder and improve it next time. Ultimately, this small forex trading mistake might make a big difference.
MISTAKES IN THE FOREX TRADING ENVIRONMENT:
Many traders consider forex trading mistake to be the result of (in terms of cash) any given trade. In fact a forex trading mistake has nothing to do with that, mistakes are the outcome of the trade violation of certain guidelines that are not properly followed. You make certain rules for your trade and when you break those rules, the following scenario emerges.
First scenario: The system signals a trade.
1. Signal of forex trading taken and trade turns out to be a lucrative trade.
Consequence of the trade: Affirmative, earned money.
Achieved experience: Its useful to follow the system, if I do this constantly, it is most likely that I will be successful. Trader and system achieved confidence.
Mistake made: None.
2. Signal of forex trading taken and trade end up in a loosing trade.
Consequence of the trade. Negative, lost money.
Achieved experience. It not possible to triumph in every single trade, a loss in trade is also part of the forex trading business; our raw material, we know we cant get them right all the time. Even when the trade is lost the trader is still proud of following the forex trading system.
Mistake made: None.
3. Signal of forex trading not taken and trade end up in a profitable trade.
Consequence of the trade. Neutral.
Achieved experience. Dissatisfaction, the trader at all time present in the trade that turned out to be unsuccessful trades and let the productivity in trades disappear. Assurance is lost in the trader himself.
Mistake made: Not taking a trade when the forex trading system signaled it.
4. Signal of forex trading not taken and trade ends up in losing trade.
Consequence of the trade: Neutral.
Achieved experience. The trader will begin to think “hey, I’m better than my forex trading system”.
Even if the trader does not ponder on it knowingly, the trader will give good reason on every signal given by the forex trading system as deep in his or her mind, his or her feeling is smarter than the system itself. Now the trader will try to guess the intentions of the system. This mistake has devastating effects on our self reliance to the system. The trader will exaggerate its self confidence.
Mistake made: Not taking a trade when system signaled it.
Second Scenario: Forex trading System does not signal a trade.
1. No trade is taken.
Consequence of the trade; Neutral.
Achieved experience: Excellent discipline, only thing we require is to take trades when the chances are in our favor, while the forex trading system signals it. When certainty acquired in both the trader himself/herself and the system.
Mistake made: None
2. A trade taken ends up in profitable trade.
Consequence of the trade. Affirmative, made money
Achieved experience: This mistake has the most devastating outcome in the trader self, the system and most importantly in the trader?s forex trading career. You will start to reflect that you need no system, you know more than the rest of them. From this point, you will begin to trade based on you consideration. Assurance in the system is totally lost. Assurance in the trader himself or herself ends into over-optimism.
Mistake made: Take a trade when there was no signal from the system.
3. A trade is taken but ends up in a loss trade.
Consequence of the trade. Affirmative, money is lost.
Achieved experience. The trader will rethink his plan. In future the trader will consider it twice before getting in a trade when the forex trading system gives no signal. The trader will say “Ok, it is better to get in the market when my system signals it, only those trade have a higher probability of success” self confidence is achieved in the system.
Mistake made: proceed with the trade when there was no signal from the system.
As can be seen, there is totally no connection between the consequence of the trade and a mistake. Even the most devastating mistake has a positive trade result, made money, but this could be the start of the ending for the trader’s business. As mentioned earlier, mistakes should only be linked to the breaking of rules of the trader.
Such mistakes are directly linked to the signals that are given by a system, but it is similarly applied while giving up the trade. There are also mistakes linked to the following forex trading plan. Such as, taking more risk on money, on a given trade than the risk the trader should have taken.
Many of the mistakes can be evaded by having a forex trading plan first. A forex trading plan has the system the principle used to get in and out the forex trading market, the management plan of money: the quantity of money we will put into risk on any given trade, and much more points will be considered. Second is the most important that is about the need we require to strictly follow our plan. We first created our plan when there was no trade placed on, therefore no psychological barriers were placed in advance. Hence, the only thing we are definite is to follow our plan, the judgment will aid us to have better outcome. We don’t have to be concern about the dealings that are made in isolation, or trades that could have given us better outcome in the beginning,but later they could have devastating outcome in our forex trading business.
How to handle forex trading mistakes.
There are several ways to manage forex trading mistakes.
We will propose the one that is best for us.
Step one: Forex trading belief change.
Each and every forex trading mistake is a part of learning experience. There all have something precious to present. Try to lessen the usual propensity feeling dissatisfaction and come up to forex trading mistakes in an affirmative manner. Rather than yelling all around and let down the feeling, talk to yourself ok, I made a forex trading mistake, what can I do now? What is it?
Step two: Identify your forex trading mistake.
Explain the forex trading mistake, find out the reason behind the mistake, and try your level best to successfully perceive the nature of that mistake. Once you judge nature of your forex trading mistake, you can prevent yourself from committing the same mistakes in future. Often you will find the answer where you are less anticipated. Take for example a trader that doesn?t follow the froex trading system.
The simple reason behind this could be that the trader is not confident about the forex trading system. He is afraid of loosing.. But why the trader is afraid? May be because the system the trader is using does not fit him or her, and are not comfortable to follow every signal. Here you can observe that the nature of mistake is not in the surface. You have to make your utmost effort to find the real one.
Step three: Calculate the outcomes of the forex trading mistake.
Outcomes of committing that particular forex trading mistake, both positive as well as negative. Positive outcomes are those that make us better traders once we deal with the mistake. Envision all the possible details you have learned from your forex trading mistakes. From the abovementioned example, what are the outcomes of committing that mistake? In case you are not able to follow the system, you will gradually loose self reliance in it, at the end will put you into trades you don?t desire it, and out of trades you should be in.
Step four: Taking proper action for forex trading.
Taking appropriate action fore forex trading is the ultimate and most valuable step. In order to learn, you have to change your attitude. Making certain that whatever you do, you should be “this mistake proof” By taking that appropriate action we turn each mistake into achievement in our forex trading business. Ongoing with the same example, redefining the system would be the trader’s ultimate goal. The trader should make a impeccable system which can suits him or her, so the trader can easily identify the following future signals.
By realizing the fact that the consequence of forex trading has nothing to do with a mistake to make you understand other possibilities, and you will have the ability to understand the nature of every mistake made. At the same time this will show you other forex trading business as you labor and act appropriately on every mistake made.
In forex trading the road to success is slow and takes a long times, it is attributed to frequent mistakes made and the continuous battle to negotiate with these mistakes. Our outcomes depends on the way we deal with forex trading to shape our future as trader, as well as a person.

One of the most neglected subjects regarding forex trading is forex trading psychology. When you are aware of all the psychological factors that deal with every forex trading decision will put the chances of success in your favor.

There are many traders who spend days, months and years trying to find the correct forex trading system. But having a forex trading system is one of the parts of a huge game. Although having a forex trading system is a significant part that suits the trader, it is as significant as having a cash management plan, or to know the psychological barriers that may affect the trader’s judgment. To be successful in forex trading business, it is important to have equilibrium between all significant aspect of forex trading.

In the forex trading environment, when the trade is lost. What is the very first idea that comes into our mind? It could possible be, “There must be something wrong with my forex trading system”, or “I knew it, I shouldn’t have taken this trade” (although my forex trading system signaled it). Sometimes we have concentrated little more in order to understand the nature of our mistake, and then develop our strategy.

While trading the forex trading market and other markets, only 5% of traders achieve the final objective to be coherent in gains. The remarkable thing is that only small difference between this 5% of traders and the remainder of them. The highest 5% increase from forex trading mistakes, by all the forex trading mistakes they learn a precious lesson by each forex trading mistake they made. In their minds deep inside, a forex trading mistake is another opportunity to work harder and improve it next time. Ultimately, this small forex trading mistake might make a big difference.

 

MISTAKES IN THE FOREX TRADING ENVIRONMENT:

Many traders consider forex trading mistake to be the result of (in terms of cash) any given trade. In fact a forex trading mistake has nothing to do with that, mistakes are the outcome of the trade violation of certain guidelines that are not properly followed. You make certain rules for your trade and when you break those rules, the following scenario emerges.

 

First scenario: The system signals a trade.

 

1. Signal of forex trading taken and trade turns out to be a lucrative trade.

Consequence of the trade: Affirmative, earned money.

Achieved experience: Its useful to follow the system, if I do this constantly, it is most likely that I will be           successful. Trader and system achieved confidence.

Mistake made: None.

 

2. Signal of forex trading taken and trade end up in a loosing trade.

Consequence of the trade. Negative, lost money.

Achieved experience. It not possible to triumph in every single trade, a loss in trade is also part of the forex   trading business; our raw material, we know we cant get them right all the time. Even when the trade is         lost the trader is still proud of following the forex trading system.

Mistake made: None.

 

3. Signal of forex trading not taken and trade end up in a profitable trade.

Consequence of the trade. Neutral.

Achieved experience. Dissatisfaction, the trader at all time present in the trade that turned out to be              unsuccessful trades and let the productivity in trades disappear. Assurance is lost in the trader himself.

Mistake made: Not taking a trade when the forex trading system signaled it.

 

4. Signal of forex trading not taken and trade ends up in losing trade.

Consequence of the trade: Neutral.

Achieved experience. The trader will begin to think “hey, I’m better than my forex trading system”.Even if the trader does not ponder on it knowingly, the trader will give good reason on every signal given by the forex trading system as deep in his or her mind, his or her feeling is smarter than the system itself. Now the trader will try to guess the intentions of the system. This mistake has devastating effects on our self reliance to the system. The trader will exaggerate its self confidence.

Mistake made: Not taking a trade when system signaled it.

 

Second Scenario: Forex trading System does not signal a trade.

1. No trade is taken.

Consequence of the trade; Neutral.

Achieved experience: Excellent discipline, only thing we require is to take trades when the chances are in our favor, while the forex trading system signals it. When certainty acquired in both the trader himself/herself and the system.

Mistake made: None

 

2. A trade taken ends up in profitable trade.

Consequence of the trade. Affirmative, made money

Achieved experience: This mistake has the most devastating outcome in the trader self, the system and most importantly in the trader?s forex trading career. You will start to reflect that you need no system, you know more than the rest of them. From this point, you will begin to trade based on you consideration. Assurance in the system is totally lost. Assurance in the trader himself or herself ends into over-optimism.

Mistake made: Take a trade when there was no signal from the system.

 

3. A trade is taken but ends up in a loss trade.

Consequence of the trade. Affirmative, money is lost.

Achieved experience. The trader will rethink his plan. In future the trader will consider it twice before getting in a trade when the forex trading system gives no signal. The trader will say “Ok, it is better to get in the market when my system signals it, only those trade have a higher probability of success” self confidence is achieved in the system.

Mistake made: proceed with the trade when there was no signal from the system.

 

As can be seen, there is totally no connection between the consequence of the trade and a mistake. Even the most devastating mistake has a positive trade result, made money, but this could be the start of the ending for the trader’s business. As mentioned earlier, mistakes should only be linked to the breaking of rules of the trader.

Such mistakes are directly linked to the signals that are given by a system, but it is similarly applied while giving up the trade. There are also mistakes linked to the following forex trading plan. Such as, taking more risk on money, on a given trade than the risk the trader should have taken.

Many of the mistakes can be evaded by having a forex trading plan first. A forex trading plan has the system the principle used to get in and out the forex trading market, the management plan of money: the quantity of money we will put into risk on any given trade, and much more points will be considered. Second is the most important that is about the need we require to strictly follow our plan. We first created our plan when there was no trade placed on, therefore no psychological barriers were placed in advance. Hence, the only thing we are definite is to follow our plan, the judgment will aid us to have better outcome. We don’t have to be concern about the dealings that are made in isolation, or trades that could have given us better outcome in the beginning,but later they could have devastating outcome in our forex trading business.

How to handle forex trading mistakes.

There are several ways to manage forex trading mistakes.

We will propose the one that is best for us.

Step one: Forex trading belief change.

Each and every forex trading mistake is a part of learning experience. There all have something precious to present. Try to lessen the usual propensity feeling dissatisfaction and come up to forex trading mistakes in an affirmative manner. Rather than yelling all around and let down the feeling, talk to yourself ok, I made a forex trading mistake, what can I do now? What is it?

Step two: Identify your forex trading mistake.

Explain the forex trading mistake, find out the reason behind the mistake, and try your level best to successfully perceive the nature of that mistake. Once you judge nature of your forex trading mistake, you can prevent yourself from committing the same mistakes in future. Often you will find the answer where you are less anticipated. Take for example a trader that doesn?t follow the froex trading system.

The simple reason behind this could be that the trader is not confident about the forex trading system. He is afraid of loosing.. But why the trader is afraid? May be because the system the trader is using does not fit him or her, and are not comfortable to follow every signal. Here you can observe that the nature of mistake is not in the surface. You have to make your utmost effort to find the real one.

Step three: Calculate the outcomes of the forex trading mistake.

Outcomes of committing that particular forex trading mistake, both positive as well as negative. Positive outcomes are those that make us better traders once we deal with the mistake. Envision all the possible details you have learned from your forex trading mistakes. From the abovementioned example, what are the outcomes of committing that mistake? In case you are not able to follow the system, you will gradually loose self reliance in it, at the end will put you into trades you don?t desire it, and out of trades you should be in.

Step four: Taking proper action for forex trading.

Taking appropriate action fore forex trading is the ultimate and most valuable step. In order to learn, you have to change your attitude. Making certain that whatever you do, you should be “this mistake proof” By taking that appropriate action we turn each mistake into achievement in our forex trading business. Ongoing with the same example, redefining the system would be the trader’s ultimate goal. The trader should make a impeccable system which can suits him or her, so the trader can easily identify the following future signals.

By realizing the fact that the consequence of forex trading has nothing to do with a mistake to make you understand other possibilities, and you will have the ability to understand the nature of every mistake made. At the same time this will show you other forex trading business as you labor and act appropriately on every mistake made.

In forex trading the road to success is slow and takes a long times, it is attributed to frequent mistakes made and the continuous battle to negotiate with these mistakes. Our outcomes depends on the way we deal with forex trading to shape our future as trader, as well as a person.

 

 


 

 

Emotional & Behavioral Part

 

6.1 Trading Psychology

6.2 Trading Like A Pro

6.3 Psychology Of The Market

6.4 The Psychology Of Individual

6.5 Keep A Cool Head

6.6 Mind Over Profits

6.7 The Battle Against Human Nature

6.8 Face the Truth of Forex Trading

6.9 Overcome The Barriers Of Trading

6.10 Expectations Vs Reality In Trading


Forex Education


The Basics of Currency Forex Trading
Technical Analysis
Technical Indicators
Fundamental Analysis
Intraday Trading
Emotional & Behavioral Part
Risk & Money Management
Trading Guide