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Emotional Aspects of FOREX Trading

Emotional Aspects of FOREX Trading (13)

Although many of my previous articles pointed to the act of 'focusing' to some degree, this will be the first time I've written an article that 'focuses' on this very subject. Because of how important I've found this subject to be in my own analysis and trading of the markets, it deserves a bit more consideration than a brief mention within some other topic.
What is the 'truth' of trading? Is it the secret of wealth? Could it possibly be that, in the long run, your efforts towards trading are wasted? Is it that you must belong to some underground trading cult to succeed? May it possibly be that to trade well, you must know everything about the fundamentals? Maybe it is discovering that one indicator that will tell you where every turn will occur before it does.
I believe it is fair to say that the great majority of those who enter into trading the markets do so to make money. Regardless of their overall goals, whether it be to make a living from trading or to simply increase their wealth, a trader enters this business for one main reason; to succeed at it.
When it comes to trading, one of the most neglected subjects are those dealing with trading psychology. Being aware of all psychological factors that affect every trading decision will put the odds in your favor.
Summary: Fundamentals & Technicals Rumors and News Fear and Intervention Flock Mentality Conclusion
It is inherent of most people. You get into a trade that starts to do good. You see some profits accumulating and immediately plan your exit. Why? Because you start to fear that you will end up giving it back if you don't take it quickly.
Summary: Taking responsibility of your capital Cut your losses early and let your Profits Run Discipline
A good instinct before the trade (BEFORE your money is at risk) is a clear mind making rational decisions. Bad instincts during the trade (WHILE your money is at risk) are fear and anxiety sabotaging your rational thought process.
Most traders that I talk to, when asked, tell me that they always consider first, and predominately use Daily price charts. Maybe out of habit, or because most of us end up trading at that time level that this has become the case for most. But is putting so much emphasis on Daily charts (or Intraday) as opposed to the higher time frames (i.e. Weekly, Monthly) the best approach for traders who are not in and out of the markets each day?
One of the sadiest things I have to do from time to time is read a letter from a trader who admits to 'breaking the rules' and bringing their account down to its knees. The second sadiest thing is that they cannot afford to trade yet they feel they have to.
Before you do your first trade, familiarize yourself with the most common mental mistakes new traders make. You will probably still make them but knowing what they are will make the process of correcting your shortcomings easier.
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