Emotions on the forex market
It has been repeatedly said how emotions can affect the performance of a Forex trader. Often it is the trader's inability to control his passions that is the main reason why he cannot become successful in trading.
This is not surprising, because when guided by emotions instead of logic, the number of errors increases in direct proportion to the progression.
But what can you do? Any trader is first of all a man, not a computer program, so emotions are no stranger to him. So, what does a trader need to feel comfortable working on Forex market?
First of all, it should be a comfortable lot size that is also called a trade position.
After all, "big money" has its own meaning for everyone. For some people five hundred dollars is the amount of money they will work for a few days, and for others it is not worth leaving their homes for.
When it comes to Forex trading, this criterion becomes more apparent. Here is an example.
Let's assume that there is trader A on the exchange. This trader trades with a small lot, for example, 0.2. So, his deposit grows and grows slowly from month to month. And at a certain moment, the trader looks at his trading history and begins to think that if he had his own brilliant Forex strategy, he would trade not 0.2 lot, but the whole lot, for example, then he would have much more money. And the money to increase the lot is already on the deposit. And A starts to trade with the whole lot, but there is no profit, rather the opposite. Why does this happen? After all, if he had traded the old way, 0.2 lots, he would have earned a handsome sum.
The point is that as the lot size increases, the probable profit increases, and with it the probability of loss. In other words, the risk has increased. So, the trader gets anxious and starts making mistakes that he or she would not have made if he or she had worked by the old, comfortable for him or her financial scheme.
Based on the above example, we can conclude that every trader needs to know the acceptable level of risk at which he or she can trade with the maximum comfort. If the trader exceeds the level set for him, it may cause the opposite result instead of the expected profit.
But it cannot be said that when trading at the currency exchange market one should put aside all emotions and be guided only by logic. For successful trading you need a well-developed intuition.
Usually, in addition to technical analysis, traders are bombarded with an unrealistic flow of information and news in the form of economic reports and expert comments that even the reading of these reports is a very difficult task, especially for beginners. Not to mention the detailed analysis of the received information. This is where intuition is particularly useful for a trader as part of his Forex trading strategy, because it is often intuition that helps find the right decision in a nonstandard situation.
So what does one need to be successful on the currency market? Undoubtedly, it is a tested trading system, an algorithm of which a trader unconditionally uses in everyday trading, putting aside emotional background and doubts, plus intuition, an ability to determine the main thing and cut off the secondary, as well as an invaluable experience, which, as we remember, "the son of many mistakes".