Effects of Fear and Greed in Forex Trading

The psychological impacts Trader which affect the performance of a forex trader are fear and greed, whether you are a forex beginner or an experienced expert. Psychology also plays a very important element in the hunt for long-term market profitability of every individual trader. The mind of a Forex trader is both his prime asset and his greatest weakness, it is either a weapon that can be used to advantage, or one that can destroy a trader.

Financial trading requires great experience, flexibility and discipline. As humans we are very vulnerable to make mistakes as emotional beings. A Market trader will deliver cold-blooded Trading Strategy analysis and execution. Financial trading psychology is of the utmost importance to ensure that all trade decisions are taken with integrity, trust and accuracy. It’s almost impossible to stick to your system for any amount of time without having enough faith in your ability to trade.

Perhaps the hardest challenge we face in making our ambitions a reality is managing our emotions during our trading. Increasing prices are an example of greed in the markets and we see the picture of fear taking over when prices are dropping. Greed is causing rallying prices and fear is causing them to fall. Greed and fear in forex trading are very powerful forces that affect all fx traders, including the most experienced traders as well.

Fear of losing money in Forex Trading can be helpful as well as bad, you just have to find the right balance and not be too scared. Fear of cleaning out your trading account will cause you to place stop losses on all of your market trades, so fear is good for the forex trader in this way. But fear can also act against us by causing us not to enter a good supply and demand or price action setup just because we’re afraid to lose money, maybe because we’ve just had a series of losing trades which happen. The other major reason FX traders get worried about trade is that they cost so much money per transaction and just lost more than they could stomach.

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