Monthly Archives: May 2014

Forex Trading Psychology

Forex trading, like any other human activity, has its own set of psychology concepts. In fact, your failure to take into account the ways that trading psychology affects your judgment in buying and selling currencies can be the end of your career as a forex trader. Keep in mind that your state of mind affects your actions, which may or may not work in your favour in the long run.

You must beware of two destructive emotions when trading in the forex market or any securities market, for that matter. These emotions are fear and greed, both of which will distort your judgment although each one works in a different manner.

On one hand, fear is induced by a perceived threat that may or may not be present in reality. As applied in forex trading, it holds back traders from making the trade even when the opportunity is clearly visible as well as to prematurely close the trade without waiting for it to be profitable. Your fear can come from a wide variety of causes, including fear of suffering from a financial loss or fear of not following the big guns lead.

Continue reading