In most Forex training articles about this subject the authors tend to write mainly about greed and fear – they will lead you to ruin, you must master them, you will blow up your account etc.
Greed and fear are most definitely the big boys in the emotional battleground but there are a number of other emotions to look out for too that a standard Forex trading course may not cover. Emotions I am talking about are denial, guilt and euphoria. How could those possibly affect your Forex trading?
Every professional Forex trader to some extent keeps a trading log. This isn’t always just for regulatory compliance or for client feedback. To a novice trader, it also helps to combat denial. Most traders reading this have at some point during their career left a trade or two off the trading log at the end of the trading day. Trail of thought people usually follow is – “If I didn’t take that trade then I would have been positive for the day… well I learnt my lesson… I won’t do that again”. Whether you like it or not, this is denial. Your memory will not last as long as the trading log. In 2 months, when you make a mistake and have that niggling feeling that you had seen it before will only make you angry so realistically there is no point of cheating yourself.
Are you trading with funds you cannot really afford to lose? Are you worried about what happens if you lose a trade? Is your wife/husband/girlfriend/boyfriend pleading with you to get off the computer and spend time with them? Are you a novice trader and all you can think about is what variations of your trading strategy you need to test? Should you be focusing on your full time job, but keep alt-tabbing to your trading platform to sneak a look? All these feelings and scenarions will throw some format of guilt at you.
The feeling of joy, happiness and excitement. In trading terminology – making money. The more you make and the quicker you make it, the grander the feeling. So what is the problem? Two words – “Can’t lose”. Trust me, you can. Have you ever had a huge win and in the next trade you have given it all back? Have you ever been on the edge of having a really, really good day and finishing up at break even or worse? Have you ever finished such trade or trading day and wished you had walked away? This is euphoria. You were happy for a while as things were going your way and you simply thought that you could not lose.
What is the solution?
Your trading strategy must completely and totally match you. There is no point scouring the internet forums and websites looking for a trading strategy that you can copy and get rich with. As a new trader you will attempt to find a ‘holy grail’, a set of rules that you can follow that will make you money. You want to know a secret? There are tens of thousands of ‘holy grails’, literally. One day you will have a ‘holy grail’ too, your holy grail isn’t a set of rules you have found or heard down the pub, it is a strategy that completely and utterly matches you. A strategy that matches your personality, your propensity to risk, your emotional control, your financial requirements, your lifestyle and your trading hours.