Currency Trading Psychology - Controlling your Emotions
The fact is, the majority of traders lose because they cannot control their emotions - and their emotions cause them to make irrational trades and lose. Trading psychology is one of the keys to investment success, but its impact is not understood by many investors, who simply think they need a good trading method, but this is only part of the equation for winning at currency trading. The influence Of Hope and Fear In currency trading psychology, two emotions that are constantly present are: Hope and fear. One of the traders who recognized this was the legendary trader W D Gann. Hope and fear are destructive emotions and all traders are influenced by them, they are part of all traders’ psychology. Hope and fear can make traders act irrationally, they know what they should do, but they simply can’t do it. Executing a trading method with discipline is the only way to overcome destructive emotions. Human Nature Is Constant – Exploit It for Trading Success It doesn’t matter what market you trade: Commodities, stocks, currencies, or what type of trader you are, a day or position trader, the fact is, trading psychology influences the majority of traders. If you can control your emotions and trade with a disciplined plan you can gain a trading edge. A Disciplined Plan for Big Profits You need to control your emotions by having a specific plan, which if followed will gain you the correct currency trading psychology. Having the correct currency trading psychology is just as important as having a good trading method. Essential Reading for Any Trader There have been some excellent writers on trading psychology including: W D Gann Jake Bernstein, Larry Williams, Dr Van Tharpe and Jack Shwager and you should read Shwager’s books Market Wizards and the New Market Wizards. Emotion is part of human nature. We cannot avoid them. All we can do is control it and not make the mistakes the majority of traders do and adopt the right currency trading psychology. If a trader can adopt the right psychology, they will gain a significant edge in their quest for long-term currency trading success.
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