More money is lost because of emotions in day trading Forex currency than because of the unpredictable nature of the markets. It's easy to see in action too. Whenever you hesitate to get in on a winner, that costs. Whenever you hang on to a trade too long and don't take your profits when they are in hand, you're just giving that money back to the markets. In each instance that you exit a winner early and miss the run is just more evidence of emotions costing you money.
You've heard the saying, "Once bitten, twice shy." The source of many emotional problems in day trading Forex currency is fear. There's the fear that you'll get bitten again, because it's happened before. Hesitation comes from that fear, as well as tthe staying in your trade too long and getting out too soon.
There are other emotions that come into play for sure, like hope, guilt, confusion, pride, anger, greed, despair, shame, anxiety, plus a host of others. Revenge is a big one too. Often when you take a painful loss that has you beating yourself up, revenge often comes to mind. You want to get back at the markets and reclaim your capital. It's a natural human response.
In many regards, day trading Forex currency runs counter to our human nature and all that we've been taught growing up and that's a big problem. Our emotions are part of a survival mechanism that in trading, tend to work against you. It's not natural for humans to step into a potentially high-risk situation, experience pain (lose money) a significant portion of the time, just accept it, and then immediately turn around and do it again. Self-preservation is our natural response. In day trading Forex currency, you're dealing with the unknown behavior of the markets, in addition to trying to assimilate a large amount of knowledge as you continue to develop as a trader..
Gaining control over your emotions, or at least to the point that they don't cause problems with your ability to make good decisions and to act without hesitation at the right time can't just be willed into being. It doesn't work to try to 'force' discipline or to fight your feelings.
As your confidence builds, your fears will subside, plus you'll find that it becomes easy to have the discipline to do the right thing when the time calls for it. Keep in mind that forcing it doesn't do. Certain skills must be developed to make this happen, especially Emotional Intelligence.
Since for most, trading is an entirely new activity, this can be quite a challenge. In any occupation, to be good at it and have the confidence you need, and like all new experiences, you have to develop the skills for day trading Forex currency. Usually when you start a new job, your employer will train you. Because the importance of establishing the proper skill set, most companies would put you through training to ensure you get established properly. The chance for that just isn't presented to most traders. The toughest way to learn any occupation is to be self-trained and by simply being thrown to the wolves, and this is particularly true in day trading Forex currency.
Books on 'Trading Psychology', many authored by psychologists and not traders have been the sole option for most in the past. Emotional Intelligence is not a concept though, it is an ability and a skill. Skills are developed from specific actions, not from reading. Experience is what grows your skills, not just acquiring new knowledge.
Training on how to become a successful trader has been largely non-existent until now. Most training that is available focuses 90% on the system, not on you as the trader, and certainly not on developing Emotional Intelligence as a trader. Real trader training is now available through the Trading P.I.T. Club by Inside Out Trading. The training consists of 26 weekly lessons specifically designed to eliminate your fears and give you the confidence you need to trade well, without the emotional influences that can be so costly in day trading Forex currency.
How much have your fears and other emotions already cost you in your trading?
Get your FREE six-lesson mini-course on Emotional Intelligence for Traders by going here,
http://insideouttrading.com/pit/
Right now!
Tuesday, August 5, 2008
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