Examining The Psychology Of A Forex Trader
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Today forex trading is becoming extremely popular. At a time in history when unemployment levels are abnormally high and most of the world has internet access, trading for a living is extremely compelling.
The unfortunate fact for the majority of new traders is that statistics indicate over 95% will lose money and quit within the first 3 years. There are many reasons why, perhaps one of the biggest is an issue of psychology.
As humans we consider ourselves to be logical but psychologists have discovered that when it comes down to it, more often than not we will make decisions based on emotions.
In trading, the 2 emotions that most people experience are fear and greed. This goes back to the reptilian part of our brains along with the fight or flight response. Consider how you would feel after winning $1000 trading, pretty good right? Now consider how you would feel after losing $1000 trading. If you'r e like most people, losing is more of an extreme emotion.
There is an expression in poker called "tilt" or "tilting". It's a known fact that many people after losing a big and will tilt which means that they will start to make irrational decisions that end up costing them more money. This is the same in trading. A person can have very good discipline and trade according to their plan, but after a few losses they may throw the rules out the window and make poor decisions.
Trading is in large part a game of personal mastery. One has to be able to keep their cool under stressful conditions. Many experienced and successful traders report that even after years of trading they still experience some fear if the trade starts going against them. The difference is that they learn how to accept the fear and keep making decisions according to their trading plans. |
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Author Resource:-
Learn FX Scalping from the professionals at Forex Mentor.
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By :
Alex Harper
Submitted
2011-04-20 15:46:40 |
Article From Article Mayhem
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