By Admiral Markets
Most people think that the reason people fail and lose a lot of money at forex trading is because they do not have a sound strategy, or they simply do not know what they are doing. Although these factors do play a role on why people fail, the biggest reason for failure in the forex marketplace can be when people lose control of their emotions. This will usually lead forex traders into some very bad decision-making and permanent damage to their account balances.
It can be pretty easy for you to put the blame on your broker, on the markets or anything else for that matter if your trade does not go in your favor. But, if you are the one at fault because you chose not to follow and execute your trading plan, and you chose to go with your emotions instead, then the blame is all on your shoulders.
If you want to be a successful trader, then you need to learn how to keep yourself calm and collected even when things get rough. In fact, sometimes this can be one of the biggest differences between a losing trader and a successful trader in the forex markets.
How to Control Your Emotions
This may sound a bit weird, but in order for you to achieve success, you must first experience how to lose; or at least learn what it feels like. When you go into a trade and you find that it is gradually going south, your first impulse can be to get out of there before you lose even more money. Though that is a safe way to play things, if your trading plan calls for it, you should be sticking around looking for the market to move in your favor. Keep in mind that the forex market is incredibly volatile, and you need to factor this into your trading decisions and strategies.
To prevent yourself from incurring really large losses, you should always place a stop-loss order on your forex trading platform; this way, you do not have to constantly watch the market, which will only turn you into a nervous wreck.
On the other hand, when your trades are actually going better than you thought, it will make you want to stick around to find out just how high your profits will go. This can be pretty exciting, and also very risky because the market may take a nosedive when you least expect it. So, to make sure that you are actually making a profit, place an order on your platform to get out once you have made a certain amount of money; just make sure that you place a decent number.
Stop-loss orders and take-profit orders – a recommended part of any trading plan – can be extremely helpful in controlling one’s emotions as they cut down on the amount of trading decisions one has to make and help to eliminate unnecessary emotional stress that can accompany those decisions.
In Closing…
Even experienced traders sometimes lose their cool when they are having a hard time differentiating what is actually happening in the forex marketplace, and what they think is happening there. Your success at forex trading will mostly depend on having a good trading plan or strategy, how well you stick to your plan and, ultimately, how well you can control your emotions, so you should learn how to keep them at bay.
Source: www.admiralmarkets.ae
