The Art of Forex Emotional Management
The greatest gift you can give yourself when you start trading is understanding how your mind works and how you can harness its patterns in your favor. People tend to act upon their hidden impulses rather than their logic, which is interesting considering we think we act in a logical manner while the reality is quite different.
However, there is a way to work with it and not against it. Being aware of this problem is the first step towards a better trading. The initial tendency is to be afraid to lose. When we make profit it's never enough and we tend to want more and more. These emotional responses are completely normal. What you have to keep in mind is that in every action you make there a losing and a winning option and you have to be able to handle them both.
In case of a major lose (or win for that matter) it's important to look at the big picture. This is a part of a many loses and wins so there will always be another chance to recuperate it.
What tends to repeat itself in every person is the emotional cycle and how people react to different things during the day. The same emotional cycles that people have in their daily lives exist in their professional lives too. If you're an impatient person in your personal life, it's likely you'll experience these emotions in the way you trade. If you're a person with great patience and an ability to keep your cool, you're most likely to find yourself acting the same way in your trade. The smart thing is to know how to use these unique feelings and utilize them when you need to decide on a trading style and strategy.
There are two main emotions that can affect a trader: fear and greed. A trader must have the ability to know when to step out from an investment in time even if it means they're going to lose a little. This may sound simple but traders tend to find it a bit difficult. This is why emotional management is so important. Traders must learn to overcome their fear of losing in order to prevent further loses.
As far as greed goes, although the main goal of every trader is to make as much money as they can, you have to know when to stop and not let your greed take over your logic. That's exactly why you should have a strategy that will help you decide the right decisions.
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