There are a lot of different skills required for becoming a currency trading expert. No brainer is that you need to understand the market. However, the same or even more important is for you to understand your brain.
Seemingly, this is the trait the traders work the least. Without any reason, many overlook this important aspect of trading.
As developing your mindset is crucial to life, it is crucial for trading, too. Only currency trading expert can handle ups and downs during the day. The reason behind is a strong mindset of a trader.
In the following lines, I will describe key factors that affect our psychology when trading.
Trading Psychology of Currency Trading Expert
When embarking on a trading journey, forget everything you know about money. It is because the stories from our childhood are different than that currency trading expert would tell us.
I remember hearing when I was a kid: “look after the pennies and the pounds/dollars (local currency where you are) will look after themselves.” As part of our upbringing, everybody is teaching us to save our money and not to take risks.
Of course, this is sound advice for most people. But when it comes to trading, this goes against everything we should be doing.
For example, if looking after the pennies, you will end up cutting winners early! Following this, at the sight of being up by just a little bit, we can close our position. In this case, this is the trade on emotion from childhood.
However, if we think of our risk-reward ratio this game will turn against us. The first mistake is that we want to protect our profits. Second, we are fearful that the position will turn against us.
Seemingly, this type of thinking is something many other traders have had to deal with. In the process of becoming profitable, you have to conquer the habits that turn you backward.
How do I Overcome My Fear of Trading?
Fear is a very important aspect that a currency trading expert needs to overcome. As it affects most of the traders, especially when first starting out, it is crucial to acknowledge it.
Usually, fear comes from not having full confidence in your abilities. However, there is another fear that most must tackle.
Known as FOMO (Fear of Missing Out), this fear drives the cryptocurrencies market.
I have seen many traders struggle with this psychological issue. I must admit, I also had this issue when first starting out. It happened all the time.
What tends to happen is that the trader once concentrated on the trading strategy will change it due to FOMO. It happens when visiting a forum, Twitter account or a YouTube video.
It can happen if a novice trader spots another trader post regarding a trade they think will be a winner. In the back of a novice trader brain, this information may rise into fear.
As fear is the powerful driver, the trader might get convinced that this is a trade they cannot miss. Even though it does not align with their strategy.
This is the moment when the fear of missing out will convince them to abandon their strategy. The trader will then ultimately enter that trade.
What happens is that it is sometimes too late. Getting late means they have a wider stop then the trader that posted the trade. Eventually, they will get stopped out on a trade that isn’t part of their strategy.
How Can I be Disciplined in Trading?
It is important to know that many call themselves by the name of a currency trading expert. As it usually goes, they are loud at promoting their trades which are mostly not successful. By following their advice, you will end up losing money in the long run.
Having rules and sticking to them is a part of the strong trading psychology. If you stick to your own guns, you will not be on the road to failure.
Therefore, discipline is one of the most critical factors in trading. Going hand in hand with psychology, discipline makes you follow the strict rules.
My advice to all new traders out there is to work on discipline. In this case, it means not to deviate from the original plan. It is because the sense that you have to be strict will keep you in the market.
If not disciplined, you might forever be moving from trade to trade without a clear understanding of what you were looking for. Furthermore, you will end up blowing your account.
Discipline enforces us to avoid entering a position that has nothing to do with our strategy. Or in other cases, you might be chasing trades to recoup losses. If you trade with discipline, then the above factors will start to fade. In the end, the results will slowly begin to turn around.
Thoughts of Currency Trading Expert
The abovementioned are only a few of the reasons why trading psychology is so important. This topic could be a source for tens of pages since it is such an important matter.
Before entering the market, while still learning to trade, work on your mindset. Imagine throwing thousands of dollars while not prepared. In a matter of days, fear or lack of discipline can melt it down.
For this reason, don’t invest any money before knowing what you are doing. In the long run, it will turn out good. Even when you become a currency trading expert, make sure that your mentality is at its peak before starting.
Best wishes and happy trading!