Can you control your emotions? Can you behave like a robot? Certainly not! Human beings are emotional creatures. Our mind is capable of playing emotional tricks on us. It is often said that we are our own worst enemy. In forex trading, this is the ultimate truth. Most of our trading decisions are guided more by emotional than logical thinking.
Emotions can work against us. Emotions can work for us. Your battles are won or lost in your mind first. Victories are won and lost in ones mind. We can get seduced into unfavorable situations by our emotions. A traders mindset is the most important ingredient of success. If you have the mental strength to control your emotions, you can become a consistently profitable trader.
Do you have a strong desire to succeed in forex trading? Forex trading is not for everyone. If you just want to try your luck or dabble in trading, you will end up like the majority who end up losing their money. Do you have the passion for trading forex?
In order to become a successful forex trader, you must be highly self motivated. You must have a concrete plan of action and not be afraid of failure. Are you ready to devote a lot of time and effort into picking up trading skills and knowledge?
You need knowledge and skills in trading currencies in order to become a successful forex trader. To attain consistent success in forex trading, a huge amount of time, effort and money is required for a trader.
Losses are the inevitable part of lack of experience and knowledge. But even if you develop the experience and knowledge to successfully trade the currency market, you cannot avoid losses. There is an inherent risk in trading currencies. No one can overcome that risk. Are you willing to accept losses as part of trading? You are going to make mistakes while trading. Do you understand that you can suffer losses in trading? Are you willing to learn from your mistakes? Do you have a traders log that you use to reflect on each lost trade and learn from it?
Most of the new traders read some market analysis from an analyst. They enter into the trade based on that market analysis. Most of us tend to blame the market analysis and the opinion of the analyst if the trade turns out to be a loser. It is easy to blame others.
When you are confident that you have done your analysis to confirm what others are saying only then pull the trigger. Dont be trigger happy! You must reflect on your decision before pulling the trigger. Is it fair to blame the other person when you could have done further market analysis on your own? When you could have planned your trade in a better way, it is foolish to blame others for your mistakes. So accept your responsibility if the trade goes wrong.
Fear and greed are the two most dominant emotions that affect not only the individual traders but also the currency markets. In fact, these two emotions are the main drivers of the forex markets.
Fear makes you over pessimistic about a currency pair. Similarly, greed is going to make you over optimistic in thinking that a currency is going to appreciate. In nutshell, fear and greed are behind the steering wheel of the currency market. When fear takes over, the market turns bearish. When greed takes over, the market becomes bullish.