Although some emotions can make you hesitant to trade, others can have the opposite effect, forcing you to act when you shouldn't.
Instead of being paralyzed, some new traders have a completely different reaction and can't wait to jump into the markets. It can be more destructive.
As the saying goes, "a little knowledge is dangerous," and putting yourself in a deal before you are fully prepared is the right way to disappoint. First consider this checklist:
Are you ready to trade?
Is it right for you to use your trading platform and do you know how to use the tools you offer?
Have you developed a trading plan?
Do you fully understand all the factors currently affecting the market you want to trade in?
Have you planned your trading, thought about your goals and calculated your potential profit and loss?
If you can answer “yes” to all of these questions, and if the transaction you suggested corresponds to your trading plan, you are ready to go.
Practice restraint the same way when it comes to opening positions. After entering a trade, you should give the market time to react as you expect - do not lose patience and trade until the market has time to act.
Temptation and greed
When your trades are going well, it's natural to worry about increasing potential profits.
But at these moments, it is important to abide by the rules of your trading plan. If signs indicate that the time has come to close the position and make a profit, it is likely that you will not continue to hold onto the hope of making more money.
The same thing happens when you see an attractive opportunity to trade. Suppose you are familiar with an experienced trader who says that in his opinion, you will soon see Trendy Online Retail Group plc rise in the share price. You may tend to place a big deal, even if it interferes with your trading plan.
But it's important to remind yourself that your plan has a reason: removing emotions from trading decisions. If the risks associated with this transaction are outside the criteria you usually see, you should refuse to participate - no matter how confident you are in your friend.
Happiness and pride
When the deal goes well, you are likely to feel great satisfaction and satisfaction. Of course, you will be proud of your achievements. And if all the trades are profitable, you can even start feeling invincible.
These feelings, although positive, can also be dangerous. At such moments, uncontrollable optimism may appear, prompting you to take risks, which are usually outside your comfort zone.
We humans tend to see patterns in everything, so a series of successful deals can convince you that you are "in the winning chain". However, remember that the universe does not work this way: your next trade can easily lead to loss, so if you overestimate yourself, you may suffer a traumatic shock.
Always remember how your mood affects your trading decisions. By controlling excitement and keeping calm, you are likely to think clearly and make informed and sensible choices.
Reasonable restraint is vital. Don't trade recklessly without knowing what you're getting
If the opportunity does not match your personal trading plan, say no.
Don't let success go to your head. Enjoy your achievements, but stick to your trading strategy.
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