Avoiding Psychological Pitfalls when Trading Forex
Trade Forex Zen
01 August, 2014
When you begin forex trading you should view it as a career path rather than a 'get-rich-quick' scheme. With this attitude you should generate slow but steady profits, which is far better than a single isolated big win followed by a series of losses.
Common Psychological Pitfalls
1.Prolonged Demo Trading
One of the biggest forex trading pitfalls is spending too much time on a demo trading account.
Some people trade forex on a demo trading account for months or even years on end. Many of these people fail to find the confidence to trade on a live forex trading account, even though they have built up their trading skills considerably.
Nevertheless even the most well-prepared online trader will succumb to a forex trading loss at some point or another in their trading career. This should not be viewed in a negative light but in a positive light, as it presents the trader with the perfect opportunity to learn from that trading mistake.
For this reason, once you've spent a considerable time on the demo account its time to move on to a live trading account.
Another common psychological pitfall is thinking negatively. When you trade forex it is essential to do so with only a positive attitude. It's paramount that you eradicate all feelings of fear, worry, anxiety or stress, as you will simply carry these with you on the trading platform which will negatively influence your trades.
Instead, you need to enter the trading platform with a clear head and a clear mind. You need to be focused on your goals instead of worrying about the unknown. You need to perceive potential losses as an opportunity to learn, not to drown yourself in negative thoughts.
3.Jumping from One Strategy to Another
Another major psychological pitfall is flitting from one forex trading strategy to another. If you've devised an effective strategy that youve practised relentlessly on a demo trading account then theres no need to keep changing your trading tactics. No matter how versatile that strategy is, there will always be times when its not performing well, since it cannot perform at a peak level in all market conditions.
If you have the psychological strength to accept this then you will stick to your trading strategy with discipline and reverence. Even the most professional online traders lose money at some point or another in their trading careers. The trick is to accept losses and move on to your next trade with confidence, persistence and positivity.
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