The role of psychology in Forex trading

The role of psychology in Forex trading
Published: 13.03.2022

Many novice traders think that the main thing in trading is opening and maintaining trades, but they do not consider such a moment as the psychological aspects of trading important. This leads to the fact that draining the deposit, traders generally refuse to trade on forex.

However, no one is immune from losses, even major financial figures such as George Soros, whose maximum losses in 1998 amounted to $ 2 billion!

Not infrequently, the thirst for profit clouds the mind, thereby preventing an objective analysis of failures, and this can lead to a deplorable financial result. To avoid repeating mistakes, you can search for causes and work on errors.
Reasons for losses from a psychological point of view:
Fears - at first glance, it can be said that a cautious trader should be more successful than a risky one. But here it is worth considering one very important point - the market does not tolerate extremes.
Fear makes you close profitable deals very early, but also, fear does not allow you to open promising deals. As a result, losses begin to significantly overlap profits.

In order to learn how to manage your fears, it is better to start trading in small volumes. When choosing the position size, you need to proceed from the fact that even in case of failure, it would not be a serious blow for you and your deposit.

It is very important to be aware of how much you can afford to lose.
Let's say the loss of $20 is insignificant for you, and you won't particularly regret it. In this case, you need to develop a tactic that will not allow you to lose more than $ 20 in one day.
It will not be superfluous to use cent accounts.

Self-confidence is exactly the reason why 95% of forex beginners drain their first deposit, believing that everything depends on the size of the deposit and leverage.

You should be especially careful when taking your first steps on the stock exchange. The use of risky strategies such as scalping or martingale can lead to disastrous consequences.
This is an important rule, but it is most often neglected by novice traders.

Work on bugs
Every mistake should benefit.
Any drawdown should serve to gain experience, but in no case inspire you with uncertainty and disappointment.
Analyze your mistakes, look for reasons and draw conclusions.

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