Forex Psychology. Are you aware of all the necessary aspects that should be taken into account in Forex? Do you think that psychology can influence your investments? Let’s go deeper into this last aspect and see the characteristics and importance that psychology has in trading.
The psychologist in Forex is simply the mental resources that a person has not to be influenced by what he sees or is told at a given time.
There are numerous human psychological factors that intervene in a negative way at the moment of participating in the Forex market.
It is essential to understand and evaluate the risk you are going to assume when carrying out each activity or negotiation. It is a determining element in the trading process.
If supposedly all traders sell at the same price, read the same news and analyze the same graphs, but no one gets the same profit as another. So, what happens in each person’s mind to make some profit and others lost?
The answer is related to each person’s cognitive process, particularly the way they behave.
Forex Traits and Behavior
In general, it is not easy to obtain fixed profits, especially if you do not act in a certain way. First of all, the ideal investor must be an extremely rational person, to the extent that he or she does not allow himself or herself to be influenced by emotions.
So the emotions that must be eliminated if you want to be a good Forex trader are:
These emotions can affect negatively, causing irreparable damage to the investment.
On the other hand, the aspects that go hand in hand with positive results in investment are:
certainty in decisions
It is very important, to be able to learn from one’s mistakes. Being aware of mistakes and looking for ways not to make them again in the future can be the key to success.
It can be useful to have a trading diary, where you write down each time you make a mistake or learn a new lesson about investing in Forex.
The trader should be characterized by being a balanced individual, to the extent of knowing how to distribute and diversify their invested capital well.
Common Errors of Forex Investors
Not making the mistakes that others make can be the first step towards success, but also the degree to which each one’s performance improves.
The most common mistakes in Forex Trading are;
First of all, don’t be unprepared. It is mandatory to know the trend of the currency, thanks to the use of support instruments such as charts. Many people make the mistake of taking this risk. There is no more erroneous or mistaken attitude when trading than believing only in chance. What is needed is a clear and studied action plan and a good knowledge base about what you want to work with.
Secondly, the most common mistakes are the concern for losses. It happens that many investors have the bad habit of increasing the investment after suffering a loss.
Can we say why?
Let’s say that it is a destructive behavior, which is unconsciously generated because only the recovery of the recent loss is visualized at all costs. For this reason more money is invested in each operation to double the profit, and thus be able to recover the loss. It is a mistake that should not be made in any case, because this action runs the risk of worsening the situation rather than improving it. It is important not to expect big profits easily, because you can get big disappointments.