Put two different traders together and give them the same trading plan and these two traders trade the same currency pair. After a period of 6 months one trader would have failed and the other would have succeeded in tripling the starting account. It will come as no surprise then that the successful trader is a professional trader who understands what separates them. The answer is the psychology of trading. Have you heard of the psychology of trading? It comprises of 3 elements and they are (1) fear, (2) excitement, and (3) discipline. Let us discuss these in greater detail here:
(1) Fear
The emotion of fear causes many bad decisions. Have you ever felt the pangs of fear? You feel your heart beating a little faster, your hands grow cold and there is a surge in your blood pressure. Many traders will experience fear when they trade, this is inevitable because your own money is at stake and that means it is personal. And when things become personal humans become defensive and the feeling of fear sets in. The fear of loss, the fear of being wrong, the fear of failure and the fear of looking silly these are some of the fears that assault a trader during a trade. You may no consciously know of it but these fears exist in your sub-conscious when you trade and they play a large part in your subsequent decisions. That is not a good thing...
(2) Excitement
The next in your psychology is excitement. The symptoms are very similar to fear. And often they are mixed up. The difference is that fear brings about doubt while excitement causes a trader to take more risk than is safe. Excitement comes about when a trader thinks that the trade is a wining trade. It will affect the trader greatly because then the trader will assume that as it is a wining trade, more risk can be piled up. Rules are broken and this ultimately leads to a loss. The issue comes about when a trader swings from fear to excitement and then back again. The market goes up and down, so if wach time the market goes against your trade you will experience this huge shift from over negative to over positive. Just image the havoc it wrecks on your mind! You can't possibly be expected to function properly with all that emotion running around in you! Most accounts are lost because of this swinging and sad to say many traders do not know this.
(3) Discipline
Lastly is discipline. A disciplined trader is a good and profitable trader. Above we spoke of the emotional swing. To prevent this from affecting you and your account, discipline is required. Discipline can be gained by habit and practice. A good way is to keep a proper trading journal. Without discipline, you cannot expect to trade and be profitable at all.
Lastly, now that you have heard about the psychology, take some time to reflect on your past behavior. Have you been influenced by your emotions when you trade? If yes when you were in an emotional uproar did you trade well? Ask these questions and learn more about yourself and from there learn to be a better trader.
Dr. Joshua Geralds is a successful Investment Specialist with over twenty years experience increasing the income of people world wide. Visit http://www.pipsalot.com to learn how to make steady profits through safe trading and down load your FREE e-book "Money Management" for a limited time only!
(1) Fear
The emotion of fear causes many bad decisions. Have you ever felt the pangs of fear? You feel your heart beating a little faster, your hands grow cold and there is a surge in your blood pressure. Many traders will experience fear when they trade, this is inevitable because your own money is at stake and that means it is personal. And when things become personal humans become defensive and the feeling of fear sets in. The fear of loss, the fear of being wrong, the fear of failure and the fear of looking silly these are some of the fears that assault a trader during a trade. You may no consciously know of it but these fears exist in your sub-conscious when you trade and they play a large part in your subsequent decisions. That is not a good thing...
(2) Excitement
The next in your psychology is excitement. The symptoms are very similar to fear. And often they are mixed up. The difference is that fear brings about doubt while excitement causes a trader to take more risk than is safe. Excitement comes about when a trader thinks that the trade is a wining trade. It will affect the trader greatly because then the trader will assume that as it is a wining trade, more risk can be piled up. Rules are broken and this ultimately leads to a loss. The issue comes about when a trader swings from fear to excitement and then back again. The market goes up and down, so if wach time the market goes against your trade you will experience this huge shift from over negative to over positive. Just image the havoc it wrecks on your mind! You can't possibly be expected to function properly with all that emotion running around in you! Most accounts are lost because of this swinging and sad to say many traders do not know this.
(3) Discipline
Lastly is discipline. A disciplined trader is a good and profitable trader. Above we spoke of the emotional swing. To prevent this from affecting you and your account, discipline is required. Discipline can be gained by habit and practice. A good way is to keep a proper trading journal. Without discipline, you cannot expect to trade and be profitable at all.
Lastly, now that you have heard about the psychology, take some time to reflect on your past behavior. Have you been influenced by your emotions when you trade? If yes when you were in an emotional uproar did you trade well? Ask these questions and learn more about yourself and from there learn to be a better trader.
Dr. Joshua Geralds is a successful Investment Specialist with over twenty years experience increasing the income of people world wide. Visit http://www.pipsalot.com to learn how to make steady profits through safe trading and down load your FREE e-book "Money Management" for a limited time only!
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