Trader psychology

Trader psychology

Trading requires that you keep a cool head. The best traders succeed because they are able to control their emotions and because they think before they act. Greed, impatience and the lack of emotional control will inevitably lead a trader to lose.

Discipline: Set up a trading strategy before you trade, and set some goals in order to not make hasty decisions. Follow the signals that your plan, and use them even when you're losing. If your system has proven itself effective in demo mode, then you should trust it.  

Humbleness: When you're confronted with the markets, you have to accept the trends you see and the fact that you won't always be right. Look back on your mistakes with an analytical eye.

Keeping cool: You must always keep a cool head keep trading separate from the rest of your life. You have to evacuate any pressure you may feel and stay objective regarding the markets. Don't let trading take over your private life, don't be a victim of your ego. Sooner or later you'll have to close off a losing position; don't try to get your revenge on the market by immediately opening up another position.

Forex trader psychology

Behavioural finance theory

Behavioural finance seeks to combine behavioural and cognitive psychological theories with conventional economics and finance to understand what drives investors to make irrational decisions.

Following a trading plan

Why don't traders follow their trading plan?

Following a trading plan without bending any rules is easier said than done. Here are a few reasons why most traders have trouble sticking to their trading plan.

Successful forex traders

Successful traders vs. those that lose

Having a good strategy is not enough to make money in the forex market. When two traders use exactly the same trading strategy, they will usually end up with different or opposite results. This difference is due to the psychology of traders, as each trader tends to think differently.

Forex trader's attitude

The forex trader's attitude

The forex trader's attitude is an important element that must not be neglected. In order for a trader to elaborate a trading style that matches his mindset, he or she must identify his or her key personality traits.

Forex loser

How to cope with losing trades

In forex trading, creativity and the desire to take risks increase exponentially during winning streaks. However, this is generally not the case when your hard work and the time you've invested lead to losses instead of profits. Stress and the taking of unnecessary risks are frequent side effects after a series of losing forex trades.

Forex psychology: objectivity

How to remain objective when trading

One of the biggest challenges you'll face in your quest to becoming a profitable forex trader is maintaining objectivity while trading. While there are many factors which contribute to your loss of objectivity in a given situation, there is a clear and defined path you can follow to regain it.

Forex psychology: difference between demo and real trading

The psychological differences between demo and real trading

Most beginners who switch from a demo account to a real account generally think that their results in demo mode can easily be replicated with a real account. Due to this, some traders give up when they realise that this is not always the case. Here are some reasons:

The psychology of inexperienced traders

The psychology and behaviour of inexperienced traders

This diagram represents all of the psychological reactions that a trader or investor can feel when observing the evolution of prices. As embarrassing as it is to admit, we've all been there!